connection, the decentralized financial protocol, reached the billion dollar mark for borrowed funds from its log on June 13th with its three main markets are stable coins DAI and USDC followed by Ether (ETH).
Indeed, MakerDAO DAI takes the lead with 79.88% of the value borrowed from his minutes. Stable coins appear to be popular in Compound due to their reward mechanism gives users COMP tokens according to the value of the borrowed dollar.
With Compound, users can deposit certain cryptocurrencies to earn interest and borrow different tokens or stablecoinsAt the same time, users receive rewards in the form of COMP tokens for participating in both activities.
In the past few weeks, this system has made the COMP protocol very popular and He currently has $ 1.6 billion in assets in his liquidity funds. Currently, various DeFi protocols also show a significant increase in borrowed and blocked funds. For example, Aave currently has more than $ 250 million in liquidity funds.based on Aavewatch data.
DeFi tokens are at the top of the price list
DeFi is making great strides in terms of visibilityespecially after the disproportionate enthusiasm of the project “Coinbase-Backed Compound”. At least 10 DeFi-related tokens have made profits of more than 100% and this is partly due to the COMP reward mechanism and profitable agriculture, which enables users to act as both lenders and borrowers Earn COMP tokens for this dual role.
In its first week of operation COMP rose 233% and has been listed on Coinbase and Kraken since then. Aave’s LEND token has increased over 1000% in the past 3 months, from around $ 0.02 to $ 0.24.
The price of DeFi-related tokens not only increases along with the blocked and borrowed value of these protocols, the tokens available in these protocols have also worked properly overall.
Together with the high interest rates and the opportunities for profitable agriculture It’s safe to say that DeFi is a gift that continues to be offered to early adopters of the platforms and their respective tokens.
Some examples of this are Chainlink (LINK), which itself is the largest cryptocurrency of the Aave protocol after the LEND token.
The Basic Attention Token (BAT) made the effects of DeFI protocols on other tokens more visible than became the most widely used ERC-20 token in all DeFieven better than ETH and DAI for two weeks before the COMP reward mechanism was updated.
Why are DeFi tokens increasing?
While it’s easy to understand that DeFi is growing, The price increase of the associated tokens such as LEND and COMP is not related at all. Although tokens like NEXO give users a share of sales, LEND and COMP not.
However, these tokens are give their owners voting rights over the protocol. In other words, they are governance tokens and don’t pay dividends.
While there is no immediate monetary benefit, Participating in the future of these platforms can be invaluabledepending on how they climb over time. Hype and direct speculation around the DeFi area have certainly helped some of these tokens associated with governance.
As the DeFi sector continues to break activity records and the amount of funds blocked and loaned increases, It is possible that DeFi tokens continue to outperform Bitcoinespecially since the volume and volatility of digital assets continue to decrease.