In brief

  • Outstanding crypto loans in DeFi protocols has now topped $3 billion.
  • The space has boomed in the past few months.
  • Compound is king, but for how long?

The value of outstanding cryptocurrency loans on the top three decentralized finance (DeFi) lending protocols has surpassed $3 billion, according to a dashboard on Dune Analytics.

On Aave, Compound and MakerDAO, there is $3,078,085,890 of outstanding loans, and users borrowed $98.8 million in the past week, per the dashboard.

These lending platforms are unlike regular crypto loans companies. They’re protocols, decentralized such that no single entity controls the money that flows through them, and nobody asks you to verify your identity. 

Compound is by far the most popular platform; just over half of all outstanding loans are on Compound, or $1.6 billion, as of this writing. There’s about $1 billion of outstanding loans on MakerDAO, and $361 million on Aave. 

Growth on Compound blew up in late June, just after Compound issued COMP, a governance token, to everyone who used the platform. The governance token was designed to let users vote on proposals to update the network, but COMP also trades on secondary markets, providing users with an incentive to use the platform.

While Compound has sustained its advantage over Maker and Aave, those platforms piggybacked off of its success, booming throughout the summer and autumn. 

The gap is starting to close. In July, when Compound was at its best, the lending protocol conquered 81% of the market share; Aave held 2.55% of the market and MakerDAO 15%. Now, Compound holds 52% of the market share; Aave holds 12% and MakerDAO holds 33%. 

Although Compound may trump Maker when it comes to the value of outstanding loans, 75.7% of all loans, or $2.3 billion, are for DAI, the decentralized stablecoin created by Maker. A single DAI token is worth one US dollar; its peg is maintained by an algorithm. 

It will be interesting to see whether Compound maintains its dominance over the coming months, or whether the COMP boom gave it a temporary advantage that will continue to fade.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.