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Decentralized finance platforms are witnessing a surge in loan activity, reaching a 15-month peak. As of Nov. 30, the combined outstanding loans on the leading seven DeFi platforms surpassed $6 billion, marking the highest level since August 2022, as reported by Messari. Aave dominates with $3 billion, a 9.6% increase in the last month, while Compound Finance holds steady at $887 million with minimal monthly change.
As Bitcoin and Ethereum achieve annual peaks, investor confidence is rebounding. Many traders leverage their existing crypto holdings as collateral to secure additional assets, aiming to amplify their gains. Notably, some utilize this borrowed capital to engage with various DeFi platforms.
Anticipation Grows
Kunal Goel, a senior research analyst at Messari, highlights two primary drivers behind the surge in investor debt. He states, “Rising token values and expanding market caps allow investors to borrow more in USD against their holdings.” According to Goel, as market enthusiasm intensifies with the bullish trend, the appetite for leveraging grows.
In the DeFi realm, most lending is collateral-based, with interest rates typically ranging between 2-5%. For instance, on Aave, borrowing USDC incurs a 5.02% APR, while lenders earn 3.96%. Meanwhile, Compound Finance offers lenders a 6.59% return on stablecoins, with borrowers facing a 4.36% rate.
Tarot and spark Take the lead.
Among the leading seven lending platforms, Tarot saw the most significant monthly surge, issuing $159 million in loans—a remarkable 1,164% increase. Following closely, Spark’s Total Value Locked (TVL) reached $1 billion in mid-November, doubling its debt to $624 million within a month.
According to Messari, Spark’s borrowing surge may be attributed to airdrop farming and potential strategies involving DAI deposits into platforms like Blast. This rise is likely influenced by MakerDAO’s upcoming Layer 2 network and its lucrative stablecoin interest opportunities, pushing its TVL to $741 million—a $110 million rise since December began.
DefiLlama indicates that the combined TVL of the top ten lending platforms stands at $19 billion, capturing 38% of the DeFi market valued at $50.83 billion. Meanwhile, Coingecko notes that tokens from lending protocols represent nearly $4.5 billion in market cap, comprising 6% of DeFi’s total and 0.2% of the broader crypto market, which has seen a 4.3% increase in the past 24 hours, reaching $1.676 trillion.
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