Millions of ETH Now Locked in DeFi For the First Time Ever
Close to 3 Percent of Ethereum’s entire supply, which amounts to be around 3 Million ETH, is now locked in decentralized financial applications. Maker’s DAI dominates by far, with 2.4 million eth locked in the tokenized dollar creating dapp.
Decentralized finance (DeFi) runs pseudo-anonymous, could potentially be censorship-resistant, caters to a global market. The activities that attribute the broad aspects of the DeFi include:
1. Issuance — Refers to the creation of new assets (example: tokenized debt) that can then be traded, transferred or used to meet objective it was built for. Example — Maker ETHLend, Harbor
2. Trading — Refers to the creation of tokens that are native to stand-alone platforms (eg: Numerai Erasure) will be used under trading instead of issuance. Example — LocalEthereum, Vega, Hydro
3. Ownership — Refers to solutions that enable the custody of a token or digital asset or its growth through lending based products. Example: Metamask, Republic, Lighting Network
The DeFi ecosystem is valued to be worth over $1 Billion. The valuation is estimated to soar to Trillion-dollar potential in the next 20 years, as DeFi has the capabilities, both from a technical and regulatory perspective, to serve the 100s of trillions of dollars in financial products domain of the world.
Interesting facts about some of the DeFis on Ethereum blockchain network are the stores of Dharma, Compound, Uniswap and dY/dX which do not have tokens. And they each have a real value stored in their smart contracts, without having to build a token. That being said, there is an ideology in the DeFi community that a well-designed smart contract can be more efficient and valuable than the traditional money markets of today, making the operating costs of the money markets cheaper and at the same time reducing the fees for the end-user.
To state an example, let’s take up the case of Compound, which gives Ethereum users functionality such as shorting, and earning interest on the otherwise idle assets. There are only smart contracts one needs to understand and the functions are simple and suffice the company’s vision towards DeFi:
· Supply
· Withdraw
· Borrow
· Repay
· Liquidate
Dharma is another interesting DeFi project on the Ethereum blockchain, that has created Peer-to-Peer loan smart contracts.
Since August 2019, there has been a growth by a 44.3% increase in Total Value Locked (TVL) in ETH. The derivatives sector has seen the highest growth of +136.3% in TVL, following that is DEXs with the growth of +24%.
Notable sector-wise growth:
· Launch of Multi-Collateral Dai by MakerDAO
· Compound Raises $25M in Cash
· Peregfine suite of ETH based DeFi projects
· New synth options on Synthetix derivatives platform
· Nexus Mutual Implements Dynamic MCR%
· Uniwap and Kyber reported ATH
Published at Mon, 06 Jan 2020 12:38:26 +0000
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