Ethereum locked in Maker hits $1 billion. But for how long?
Maker has exploded in popularity this year and as of today has $1 billion locked into its smart contracts, as the DeFi liquidity mining craze continues.
Decentralized financeDecentralized finance protocol Maker today hit the $1 billion mark of total value locked (TVL) into its smart contracts.
The “value locked in” refers to the amount of money running through its smart contracts to be used for lending. Crypto data provider Messari said today that Maker is the first DeFiDeFi protocol to reach the $1 billion TVL milestone, lead in large part by the "liquidity mining" shake-up otherwise known as "yield farming."
Maker is now the third-largest DeFi token by market cap, according to data from DeFi Market Cap, and the most valuable DeFi protocol in terms of total value locked in. Compound, which launched its governance token COMP in June to much fanfare, isn’t too far behind at nearly $800 million.
The DeFi industry has continued to grow at a monumental pace. The amount of value locked into DeFi hit $4 billion at the weekend. It is now back down again at $3.6 billion, according to metrics site DeFi Pulse.
In short, liquidity mining is shaking up and causing an explosion of activity in many DeFi protocols, including Maker.https://t.co/6y0Q4dBjuT
DeFi aims to revolutionize the way finance works by running borrowing and lending protocols on the Ethereum blockchainblockchain. It has grown at such a quick pace in part due to liquidity mining—or yield farming, according to Messari. This activity, which sees DeFi platforms offer token incentives in exchange for users' deposits, is seeing investors reap huge returns.
But not everyone thinks the growth is sustainable. Even Vitalik Buterin, the creator of Ethereum (the platform most DeFi projects run on) has expressed a degree of skepticism. “Decentralized finance should not be about optimizing yield,” he said in a tweet last month after the price of Compound’s COMP token went through the roof.
Decentralized finance should not be about optimizing yield. Rather, we should be solidifying and improving a few important core building blocks: synthetic tokens for fiat and a few other major assets (aka stablecoins), oracles (for prediction markets etc), DEXes, privacy....
MKR is the governance token that dictates how MakerDAO’s decentralized stablecoinstablecoin, DAI, is run. DAI, which launched in 2017, is a ERC20 token on the Ethereum blockchain pegged to the US dollar.
The total value locked up in decentralized finance (DeFi) applications has surged from $2 billion to $3 billion in just two weeks.
DeFi is a phenomenon largely growing on the Ethereum blockchain that allows people to create financial applications without the need for a trusted third party. The most common applications let people lend cryptocurrency to (or borrow from) some unknown party around the world.
Those using DeFi often have to lock up some cryptocurrency as collateral in order to use the...
MKR holders are able to vote on decisions to help keep the price of DAI stable. MKR tokens are burned or created to keep the price of DAI pegged to the dollar. In addition to that, MakerDAO’s algorithms automatically manage the price of DAI, so no one person needs to be trusted to keep the currency steady.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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