Major cryptocurrency lending protocols processed more than $250 million in loan originations in 2018


Bloqboard, a decentralized lending aggregation platform, released their 2018 report which details core metrics across the 4 major decentralized lending protocols. The full report can be viewed here,.

Here are some of the highlights from the report:

  • The four major lending protocols (Compound, Dharma, dYdX, and Maker) cumulatively processed (sum of borrows and loans) over $251 million in originations, with Maker driving 97% of active loans outstanding (~$71.8 million outstanding).
  • Avg APRs were widely dispersed across the protocols given borrowed asset, with the lowest APR set for DAI through MakerDAO (ranged from .5% – 2.5% in 2018) and the second lowest APR for WETH at ~6% through Compound.
  • Collateral ratios varied greatly as well, with Compound north of 700%, Maker at 380%, dYdX ~160%, and Dharma holding the lowest at ~120%.
  • The ratio of borrows liquidated (total volume of borrows liquidated / total borrows) came in at .66% for Compound, ~7% for Dharma, and an eye watering 25% for Maker (with a 13% liquidation fee to boot).

The highest APR to lend out the most in-demand asset, DAI, occurred via Dharma and dYdX protocols. Median APRs to lend DAI throughout the year were 30% and 8.5% to the respective protocols. The second most lent out asset, WETH, was lent at 13% and 11% APR via Dharma and dYdX, respectively.

lendingAPRsblockchain

Collateral ratio is the most important metric to gauge the safety of lenders in secured lending, and in some cases, that of the underlying protocol. The Compound protocol had the highest collateral ratio at year-end. The reason for this is that lenders can lend to the Compound protocol without waiting for the borrower to match. This was appealing to lenders and, as a result, created disproportional demand to lend out digital assets. MakerDAO had the second highest collateral ratio at 380% on December 31, 2018. Dharma and dYdX had collateral ratios of 123% and 167%, respectively.

Over the course of 2018, lending and borrowing on open protocols grew to become the central theme within Decentralized Finance, with the four major lending protocols cumulatively processing over $251M in originations. While the rise of loans and borrows that were routed via open protocols and settled on public blockchains may seem rapid, the protocol developers and platform operators are still in the midst of building out the infrastructure and integrations with the broader ecosystem.

We anticipate that these areas will be addressed over the coming year. We also expect to see new assets such as WBTC (Wrapped BTC), other top Ethereum-based assets and a greater variety of stablecoins to be routed via these protocols. A variety of loan originators should emerge in 2019 to address different segments and jurisdictions of borrowers and lenders, including the anticipated release of Dharma Lever in Q1. We believe that Decentralized Finance will become a core value proposition for public blockchains in 2019.

 


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Samuel Tan

Samuel Wan has been an analyst and cryptocurrency evangelist for the last few years. Previously he worked as a consultant for a Big 4 consulting firm and is passionate about how blockchain will make an impact in the world. You can contact Sam at s@cryptomenow.com

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