- Despite the current market downturn, Decentralized Finance applications continue to enjoy great popularity.
- As the data from DeFi Pulse shows, the total number of Ether tied to DeFi applications rose to a new record high of 2.63 million ETH yesterday.
Decentralized Finance (DeFi) is undisputedly one of the biggest trends in the cryptocurrency market. As CNF reported at the end of October, the total number of Ether (ETH) locked into DeFi applications approached an all-time high of 2.332 million ETH. This was equivalent to around 2.13% of all Ether (ETH) in circulation. It is therefore not surprising that Decentralized Finance applications are referred to as “killer apps” for Ethereum.
Despite the current market trend, with the Ethereum price falling to around USD 150, DeFi continues to set new records. As the data from DeFi Pulse shows, the total number of Ethers (ETH) linked to DeFi applications has reached a new record high. With 2.63 million ETH, a new record was reached yesterday, equivalent to around 647 million US dollars. The growth has been steady, confirming the continuing DeFi trend.
Maker DAO and Compound lead DeFi movement
DeFi applications are decentralised financial applications (e.g. for lending) which are intended to replace the traditional financial market by the creation of a peer-to-peer financial ecosystem. By using smart contracts, DeFi users can lend or borrow their Ether (ETH) as collateral without intermediaries. The lending market alone offers huge potential, as it is a billion-dollar business.
Currently, Maker, Compound and InstaDApp lead the DeFi movement and bind the largest amounts of Ethereum. Almost half of the ETH (49.1 percent) is stored in Maker. The maker platform is used within Dai, an algorithmic stablecoin linked to the US dollar.
Second in the DeFi ranking is the Compound crypto lending platform, which binds around 317,000 ETH. The San Francisco-based company, which recently received a $25 million Series A round from venture capital firm Andreessen Horowitz, relies on smart contracts to bring together crypto borrowers and lenders.
In a recent interview with Fortune, founder Robert Leshner said that the capital would be used to make the service more accessible to ordinary people. Leshner said that by the end of 2020, compound should be integrated into crypto exchanges such as Coinbase or Kraken and wallets.
However, Maker DAO also wrote news this week when the company announced that a new version of the stablecoin will be released. This will allow users to use not only Ethereum (ETH) tokens to secure Dai-based loans, but also Basic Attention Tokens (BAT), OmiseGo (OMG), Golem (GNT), 0x (ZRX), DigixDAO (DGD) and Augur (REP).
The high demand for Ether (ETH) in DeFi applications is expected to have a long-term impact on the price of Ethereum. However, the ETH price is currently following the current market sentiment and has recorded a decline of 17.7 percent over the past seven days.