Crypto users may be looking for a more sustainable yield in this cycle, as the total amount locked in decentralized finances (DEFI) lending continues to hit new highs as decentralized exchanges (DEX) have fallen in comparison.
The Defi Lending Protocol is currently the leading defi vertical on TVL at $ 53.6 billion, representing 43% of $ 124.6 billion locked in all defi protocols. The figure is also Malapat ‘ Liquid staking.
The Multichein Lending Protocol Aave is currently holding a $ 25 billion locked value, which costs about half of the Defi Lending market.
In contrast, the dexs, which sometimes held almost double the TVL of their closest competitordropped from $ 85.3 billion in November 2021 to $ 21.5 billion today.
Explains the rising defi lending and fall on Dex TVL, Crypto Fund founder Apollo capital Henrik Andersson, told Cointelegraph that lending may be the “only sustainable way to produce produce” in defi, because Dex Liquidity pooling is more than unkind restless loss.
He also argued that the Dex Uniswap V3 industry was leading the “efficient” design, associated with Uniswap V2, may have contributed to the collapse of Dex TVL, as liquidity providers can now earn more rewards with less upward capital.
Anderson also pointed out that the increase of Intention -based swaps – A relatively new crosschain trading mechanism – may further reduce Dex TVL, as market manufacturers are usually a source of liquidity from centralized exchanges to facilitate these swaps.
Defi Lending Protocols such as AAVE and Compound Finance Enable crypto users to lend properties to earn interest or borrow against collateral. Smart contracts manage deposits, loans and interest rates to ensure unreliable transactions.
Defi users who provide ether (Eth) and tether (USDT) In AAVE, for example, currently earns an annual percentage of 1.86% and 3.17%, respectively.
Provides stablecoins and ether to DEX POOLS As Uniswap’s can offer a higher reward; However, as Andersson taught, less sustainable, changes during the day.
Defi now leads CEFI to the Crypto Lending Market
Defi-based crypto lending costs about 65% of the total market at the end of 2024 and increased or maintained market sharing against centralized lenders every quarter from Q4 2022, an April report from the crypto investment firm Galaxy Digital shown.
Autumn began to take place around the time of some centralized lending cryptos such as Genesis, Celsius network, Blockfi And the Voyager fell into losses, which caused TVL’s fall.
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Their collective collapse led to an estimated 78% collapse in the size of the crypto lending market from the 2022 climax to the bear market trough, Galaxy said.
However, this is the defi lending protocol that led to the resurgence of the crypto lending activity, Galaxy mentioned, pointing to a close 960% increase in the Defi Open Borrows between Q4 2022 and Q4 2024.
Galaxy said the strong recovery of the Defi Lending Market is a testament to the management and management skills adopted by the defi lending protocols while showing the benefits of algorithm, overcollateralized and supply-and-demand-driven borrowing models.
Galaxy expects increased institutional participation and clearer regulations to encourage the next wave of crypto lending.
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