A report by Messari researcher Roberto Talamas, indicated that the top three DeFi lenders in Ethereum, Aave, Compound and MakerDAO show record in the first quarter of 2021.
Specifically, the three projects have totally frozen over $ 25 billion in Ethereum Smart Contract.
In this regard, Messari posted on Twitter: «The credit sector went parabolic during the first quarter of 2021».
Additionally, the quarter also set a record for outstanding loans. Since $ 10 billion in funds from those platforms were redistributed to other users on the platform. Distributed as follows:
- Compound 53%
- MakerDAO 30%
- Aave 17%
Loans through DeFi
To recall, loans through DeFi gained popularity last year. Many cryptocurrency owners were able to borrow under the token guarantee. It’s convenient and fast, and you don’t need to contact the bank to get a loan.
Currently, more than $ 55 billion is locked in DeFi projects. Therefore, March and April were profitable for Ethereum.
However, there is an opinion that the second quarter of 2021 may not be so optimistic, as the prices of cryptocurrencies are falling in the wake of the price of Bitcoin.
Ethereum fell 6% in a week, Aave lost 26% in value. But, Maker grew 20% and Compound was stable. Let’s see what happens next.
Aave, Compound and MakerDAO, projects of the moment
In short, Decentralized Finance projects, or DeFi for its acronym in English, are attracting more and more attention. Not only within the world of cryptocurrencies, but also traditional banking and financial institutions.
Here is a brief summary of some of the DeFi projects:
It is a decentralized cryptocurrency loan and credit protocol, which is executed through algorithms and Smart Contracts.
Therefore, anyone with an Internet connection and a crypto wallet can lend their cryptocurrencies or request a loan at an interest rate established by supply and demand in real time.
Overall, Compound is fairly simple to use and understand, which will continue to allow itself to be a major player in the DeFi sector as more people and institutions join the space.
The truth is that it is a decentralized system based on collateralized loans, in which users can grant their ETH as collateral and receive the DAO Stablecoin (DAI) as credit.
Not least, it is a decentralized network of pools of loans collateralized and managed by the Smart Contracts of the protocol. Allowing people to freely lend, or borrow, cryptocurrencies.
Likewise, the AAVE team has also innovated within the DeFi sector with “Flash Loans” or Flash Loans. These are short-term loans, which are issued and settled within the same block of transactions.
In closing, the Messari report shows that the DeFi market continues to grow. What do you think about it? Let me know in the comment box.
I retire with this phrase from Moritz Gottlieb Saphir: «Money and credit! Two weird things. You need money when you don’t have it, and you have credit, especially when you don’t need it.».