As the cryptomarket appears to be gaining momentum, the cumulative amount backed by major DeFi lending entities has exceeded $100 million for the very first time. crypto-collateralized loans — notable DeFi platforms like Dharma, Compound, and dYdX are providing uniquely automated lending systems within the Ethereum network.
Those projects — MakerDAO Maker has dominated the space so far, with over $432 million in ether locked in Maker CDPs to back Dai loans, ensuring the Dai stablecoin maintains its $1 peg through strategic burning of tokens after loan repayments.
1/ Today marks a milestone as open-source protocol loans surpass $100 million ($100.3m at present).
Surfacing from Ethereum lending insights, Maker CDP loans tally at $85.4 million, with Dharma and Compound trailing with $8.3 million and $5.5 million respectively, while dYdX newly accounts for $1.1 million. #DeFi Strikingly, as DeFi loan volume attained $100 million, the value locked across DeFi projects such as Bitcoin and Ether surpassed $500 million concurrently. @MakerDAO = $85.4m, @Dharma_HQ = $8.3m, @compoundfinance = $5.5m and @dydxprotocol (not in the photo) = $1.1m. Charts @LoanScan_io pic.twitter.com/37ov863SvQ
— Linen Wallet (@GetLinen) May 14, 2019
Unsurprisingly, these developments coincide with crypto market renewals — Bitcoin rallying to $8,000 and Ether climbing to $220, sparking a widespread activity boost. LoanScan Many users are now tapping DeFi lending avenues to 'long' on the market, using loans for further crypto acquisitions, contributing positively to the uptick in the cryptoeconomy.
The key inquiries are if 1) Maker will continue its lending hegemony and 2) whether the current bullish streak holds out, drawing lasting DeFi participants.
500 MILLION DOLLARS IN DEFI!!! pic.twitter.com/JbMohVMQtX
— scottlewis.canto (@scott_lew_is) May 14, 2019
The DeFi boon MKR token holders have consistently voted to raise the Dai Stability Fee by nearly 20 percent this year, impacting interest rates for Dai-backed loans.
Recently, the stablecoin's price slipped under $1, nudging the Maker community to escalate interest rates, encouraging CDP closures to rebalance Dai back to its intended value.
Encouragingly, Dai's value nearby matches its peg lately, but the steep DSF hike places strain on CDP owners using it for regular transactions rather than crypto speculation.
Maker Tries to Hold Its Ground
With the Dai interest rate at 19.5 percent, alternative financing like credit cards might've been more stable. Discussions in the U.S. about capping interest rates at 15 percent render Maker's maneuvering into a regulatory gray area.
Why? It’s been a concerted effort to return the Dai to its $1 USD peg On a related note, MakerDAO recently pinpointed a critical flaw in their voting contract software, triggering a needed audit of the revised system.
Anticipation builds in the Maker community as it readies to roll out the multi-collateral Dai (MCD) system, diversifying collateral options beyond ether for Dai loan issuance.
William M. Peaster is a seasoned writer focused on Ethereum, Dai, and Bitcoin narratives within the cryptosphere. His insights feature in Blockonomi, Binance Academy, Bitsonline, and similar channels. Avid in tracking contracts and dApps, he’s pursuing Solidity. Reach him on Telegram @wmpeaster
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