Only Six Projects Account For 90% Of The Entire $7 Billion TVL Capital — Aave, MakerDao, Curve Finance, Yearn.Finance, Synthetic And Compound
The DeFi ecosystem is in a frantic bullish run, as the total value locked (TVL) in DeFi projects surpassed $7 billion, increasing its TVL with over 271% compared to the last two months. As CryptoBrowser.io reported, the ecosystem reached $3 billion TVL on July 22, 2020.
DeFi currently has over $7 billion locked in smart contracts on the Ethereum’s network, with projected TVL ratio of getting around $27 billion by 2021, if the current growth rate remains the same. The aggressive growth of DeFi during the last several months has been driven by new lending protocols, which already dethroned MakerDao as a leader.
Data from DeFi pulse shows that 90% of all locked funds are possession of only six protocols. The recent surge of DeFi led to Aave surpassing both MakerDAO and Compound. Aave has taken the leading spot with $1.51 billion TVL after obtaining an Electronic Money Institution (EMI) license from the UK’s Financial Conduct Authority. MakerDAO is now second, with a TVL of $1.42 billion. Curve Finance comes third with $1.15 billion in locked funds. The list also includes Yearn.Finance with $845 million, Synthetic with $851 million and Compound with $797 million.
Only a few numbers of projects managed to establish themselves as long-term leaders throughout the uprise of the DeFi community. For example, Yam Finance drastic rise and fall showcased the potential contract risks, as the protocol lost $750,000 worth of cryptocurrencies when Yam Finance collapsed. The DeFi sector is also not immune to hacks, as DForce suffered a hack attack in April that is worth millions of dollars to investors. However, hackers returned the stolen funds to DForce investors.
Some crypto experts even warned the crypto community about the risk of the over-bullishness of the DeFi sector. Compound’s founder Robert Lesher warned his Twitter followers that if projects like Spaghetti Money gather $500 million in less than 36 hours after its launch, “the industry needs to self-regulate and stop launching these meme farming games.”
Ethereum’s co-founder Vitalik Buterin also made a rather cautious comment on the recent DeFi boom.
“You do not have to participate in ‘the latest hot DeFi thing’ to be in Ethereum. In fact, unless you *really* understand what’s going on, it’s likely best to sit out or participate only with very small amounts,” Buterin tweeted.