DeFi TVL Reached $12.5 Billion All-Time High: Report

The DeFi TVL reached a $12.5 billion all-time high despite the cooling down of the hype as we are reading more in today’s cryptocurrency news.

Even though the hype is dissipating, the total value locked or DeFi TVL reached $12.5 billion today. The lending platforms like Compound, save, and Maker is still occupying the top five positions while other smaller protocols are gaining some ground. DeFi token prices are consolidating after the drastic fall since September but this could be quite bullish as the BTC prices increase. The total value locked in these cryptocurrency protocols continues making new-highs still. The dominant Defi projects include, Maker, WBTC, Uniswap as the decentralized finance space is much more different from the bull market which ended in September.

The leading platforms like AAve, Compound, and Yearn Finance, hit the list high as the start of the Defi boom as the shift can be correlated to the high returns on these platforms. The annual returns on yEarn is an indicator of the liquidity provider returns in the branch. The annual stablecoin returns on yearn are in the range of 6-7%. Curve and Yearn finance pools are yielding about 10-14%. The returns for ETH and BTC-based pools are about 1%. These yields are in line with the traditional centralized lenders and borrowers. For example, crypto.com offers about 14% on stablecoins while Celsius provides about 15% APY. BTC and ETH yield around 3-8%.

There’s one major difference which is the Defi ecosystem comes with bigger risks. Even with the on-par interest rates for cryptocurrency, when accounting for the risk the decentralized finance ecosystem is underperforming, especially on BTC and ETH. One risk is the centralization and the capture of a small number of users. on Curve, for example, their ethereum addresses provide 48% of the total liquidity on the protocol. Harvest Finance with $1 billion liquidity also raised concerns. The anonymous ETH addresses for Harvest finance are in control of the smart contracts which gives them power over the contract’s liquidity provider tokens and ETH balances.

In the meantime, Uniswap’s liquidity is under threat in the upcoming weeks as liquidity mining rewards expire on November 17^th. The prices also show low confidence in DeFi as governance tokens are down since September. YFI, COMP, and CRV all dropped between 60-80% while MKR and UNI dropped by 15%. DeFi prices were less volatile in October which suggests a consolidation of this year’s gains.