Compound, the leading decentralized finance protocol, hits record heights as the total lending value soars to over $15 billion worth of cryptocurrency. The total lending value refers to the total amount of cryptocurrency that is available for borrowing as instant, non-custodial loans. This amount rose from $10 billion in February 2021 to a record $15 billion on the 3rd of April 2021. As of the day of this development, ETH, the native Ethereum network token, accounts for about 34% of the supply on the lending platform. US dollar-pegged stable coins, DAI and USDC, both coins operating on the Ethereum blockchain network, account for 19% and 23% of the total lending value, respectively. The total value is supplied by 284,845 users.
Compound is on top of the decentralized finance market. About 19% value of the total locked funds in DeFi is locked up in the decentralized finance lending app, Compound. According to DeFi Pulse, a DeFI metric site, the value estimates to about $9.24 billion out of the total $48.75 billion. Up next after Compound is Maker, with $7.79 billion, and Aave with $5.8 billion.
Compound and DeFi
DeFi is a big deal with cryptocurrency, more like what you will imagine with ICOs growing with rage back in 2017. DeFi sits at the center of the crypto bull run. DeFi is a wide network of financial and non-custodial services powered by smart contracts. The protocols allow users to bank-like services except without the need of a central authority like a bank or even other third-party intermediaries.
Compound is a DeFi protocol that lets users borrow money instantaneously and earn interest in crypto. You can lend out cryptocurrencies and earn interest, likewise. It allows borrowing funds in large amounts if you can prove to pay back the loan. Most of the DeFi protocols are built on the Ethereum framework, which means that you can lend or borrow any ERC20 token. As they are non-custodial, meaning that the governance of the protocols is decentralized. Token holders vote on the network’s future, and the protocol’s creators do not have control over your holdings. Governance for the Compound project is controlled by staking COMP, Compound’s token which current price is $552.56 according to data from CoinMarketCap.
DeFi is dominating the conversation surrounding cryptocurrency. The growth has metastasized beyond expectation since its breakthrough in 2020. With crypto enthusiasts “fomo-ing” on decentralized lending protocols and borrowing stablecoins. The momentum saw the network surpassing a total value of $1billion. It closed out the year at about $13 billion, and it has demonstrated explosive growth since January 2021. Liquidity mining or yield farming was one the biggest craze to hit blockchain and DeFi protocols. It started with Compound launching its governance token, COMP. COMP served as a reward token to lenders and borrowers on the platform, and as the price of COMP, the reward increased. The idea was soon replicated across other DeFi protocols, and it’s all fireworks and bubbles after that.