The Aave Overtakes Maker and Compound in New DeFi Rankings

There is a struggle for the top spot on DeFi’s total value locked.

DeFi Pulse has some data which indicates that Aave is taking the lead to be the most important among other DeFis. It says Aave asset worth is up to $1.44 billion, which is a bit higher than Maker DAO’s by $200,000. When the race began, Compound was first but it is now fifth having been displaced by yEarn and Curve.

Compound and Aave are not exactly the same. Aave, at the moment, is not supporting liquidity mining but Compound is doing so. On Aave, there are several assets to be borrowed and deposited and those assets include stable coins that the crypto community look forward to having  which include USDT, TrueUSD, and USD Coin. This is one of the main reasons why it is doing well.

LEND asset has a total lock value of $461 million. In the past three months, LEND’s price has increased so much that its market cap value rose to more than $900 million. As LEND is one of the assets on Aave, it is no longer surprising why Aave suddenly overtook Maker and other DeFi to be the number one presently. Aave’s price saw a remarkable 20% increase on Tuesday.

Therefore, it can be said that the Aave’s Total Value Locked measurement correlates with its price.

Using TVL to judge the performance of DeFi protocols has not been widely accepted because many misinterpret it. Some think it is a less stressful way of noting which protocol is more accepted and valued.

On the other hand, Compound, Curve and other liquidity mining DeFi were what led to the occurrence of yield farming, which makes TVL to be directly proportional to the price of tokens.

Another reason why people don’t accept TVL is that the value is not actually locked since money can be taken and used elsewhere for higher profits. In the addition, the dollar equivalent of TVL is influenced by how much the assets in it are selling. LEND’s example clearly illustrates this.

Despite these challenges, the DeFi industry still prefers the use of TVL to know which assets are performing better than the others at a particular time.

Comments (No)

Leave a Reply