The Decentralized Finance (DeFi) Sector had been likened to the ICO boom back in 2017 many times, as the industry saw a massive explosion in activity in 2020. Today, DeFi had broken through yet another significant threshold, as the protocols within it vie for power.
Massive Growth In Just Three Months
More than $10 billion worth of digital assets has now been locked into the DeFi space. This includes cryptocurrencies, such as Ether (ETH), but also a number of dollar-pegged stablecoins. These cryptocurrencies have been locked into various DeFi applications, according to DeFi Pulse, the go-to data aggregator for the DeFi industry. This number, just three months ago, stood at a relatively meager $1 billion.
Almost all of that value locked stands in the form of ETH, with more than half of that being locked in three protocols, in particular. These are some of the biggest names out there, capturing attention and market share while battling the many copycat projects trying to piggyback on their success. The DeFi space is growing at an incredible rate, with all the boons and handicaps this brings.
Bringing Banking To Blockchain
DeFi Pulse gains its information from all of these protocols, doing so through blockchain analysis. Through doing so, it can determine the value of all the assets deposited by users into these protocols, which is known as Total Value Locked (TVL). This metric, in turn, is regularly used as a way to gauge the overall popularity of DeFi products within the market among the various users.
Due to how it works, DeFi protocols, which allow users to deposit crypto into financial applications through smart contracts, have better interest rates to them as opposed to traditional finance institutions. This is due to how the overhead costs are lower, which allows users to earn interest or take loans easier, using their assets as collateral, much like a bank.
The Heavyweights Of The Game
As for the top dogs in this playing field, there are three heavyweights in the space: Maker, Uniswap, and Aave. These three protocols are actively vying for the top spot, sporting over $1 billion in each of them. Both Maker and Uniswap are just under the $2 billion mark, with $1.94 and $1.92, respectively. These two firms have been battling it out to see who is the top dog.
Maker stands as a lending protocol, where you can take out collateral crypto loans, while Uniswap is a decentralized crypto exchange, allowing traders to trade amongst themselves. Aave is yet another lending protocol, only slightly behind the two heavyweights with a TVL of $1.47 billion.