Deposits are still being set in invested capital in DeFi products.
According to DeFi Pulse, the decentralized financial tool Aave has taken over the first place for «total value locked» (TVL) in Etherum. With its $ 1.47 billion, Aave has just passed MakerDAO with $ 1.45 billion on Defi Pulse’s list.
Aave’s CEO Stani Kulechov comments on the management with: “Reaching the highest TVL was possible due to the wide range of developers building on top of Aave who are expressing their innovation in DeFi. This innovation has sparked interest from institutions who are now dipping their toes into Aave. ”
This is only the second time a project has bypassed MakerDAO on the TVL list. Earlier this year, Compound passed MakerDAO a lot due to a Yield farming boom caused by Compound’s launch of a governance token – COMP – which in turn can be explained as a token that gives you voting rights in the DeFi protocol. Compound had this lead from mid-June to late July.
To put these positions in context, both MakerDAO and Compund had around $ 480 million in the TVL overview. MakerDAO has since more than doubled its position. Due to a recent rise in interest in DeFi, there are now four companies with more than $ 1bn in TVL. MakerDAO, Aave, Compound and Curve.
Aave (originally EthLend) was started as a «peer-2-peer» cryptocurrency lender in 2017 with an initial capital raising of $ 16.2 million. Aave has gradually developed into the more collective lending model used today.
With more and more new creative yield mining environments also come more and more innovative and partly wild ideas in the environment. According to Devin Walsh from CoinFund, Aave has also proven to be the backbone of many projects. She specifies that Curve and Yearn Finance in particular are dependent on Aave. “Stablecoin deposits into either of those protocols will ultimately be deposited into Aave’s money markets. Both Yearn and Curve’s yield farming programs have contributed to the massive spike in TVL over the past few weeks and in particular over the past week, ”Walsh writes in an email to Coindesk.
Another relevant project is Opium, which on Saturday announced that they have developed a «Credit default swap» (CDS) using the Aave protocol. A CDS can be explained as a contract that insures the buyer against a third party defaulting on a loan. These were very relevant in the build-up to the housing bubble that burst in the US and partly caused the financial crisis in 2008 – although CDSs can act as an «early warning» system for markets’ credit problems.
Aave has announced a Governance token distribution plan, but has not set that action yet. So while «liquidity mining» comes to the Aave protocol, that is not the reason for the ongoing positive wave.