The statistics on the total stored value – or TVL – in decentralized finance are shaken by Aave (LEND). A credit protocol that has now taken on the MakerDAO mantle as the most popular target for Ethereum-based assets.
According to DeFi Pulse data Aave has $ 1.44 billion in net worth as of press time, slightly above Maker’s $ 1.42 billion.. The previous leader, Compound, fell to fifth place and was overtaken by yEarn and Curve.
Unlike its close competitor Compound, Aave is not currently pursuing a liquidity mining initiative that could result in increased numbers. The platform offers a wide range of assets to borrow and deposit, and various stable coins like Tether (USDT), TrueUSD (TUSD), and USD Coin (USDC) make up most of their stored value.
One of the available assets is LEND itself, valued at $ 461 million. The token has seen an unstoppable rise in price over the past 90 days, reaching a market capitalization of more than $ 900 million. This is likely to have been a major factor in Aave’s current dethronement of Maker as the token rose 20% on Tuesday.
The value of the log measurement seems to depend in part on the price of the token.
TVL has come under fire during the DeFi boom due to the many perceived falsehoodsespecially since it is often used to measure the popularity and appreciation of a protocol.
However, Incentives to reduce liquidity such as in Compound or Curve led to the phenomenon of profitable farming, which inflates the TVL in a positive feedback loop.
Other pitfalls are the fact that The value is not actually stored as funds can be freely withdrawn for use on other platforms or for higher returns. Furthermore, as in the case of LEND, the dollar value of the TVL is directly dependent on the market price of the assets delivered.
Some researchers have highlighted that the total TVL of the market is prone to double counting. For example, By definition, any DAI liquidity on a lending platform like Aave is a second count of the original assets that were provided to Makers as collateral for the stablecoin minting.
While these issues have led some to suggest alternative methods of measuring the success of DeFi assets, The metric remains the most cited among industry participants.
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