In the first half of the year, DeFi was undoubtedly one of the hot spots in the industry. Many opinions believe that DeFi is the best application of Ethereum smart contracts, and even the best landing scenario of blockchain. Lending, decentralized exchanges, and stablecoins basically constitute the "troika" of DeFi. Among them, the development of the lending market is particularly noticeable.
According to the statistics of DEFI PLUS, as of August 6, the total lock-up amount in the lending market was approximately US$461 million, an increase of approximately 75.95% compared to the US$262 million on January 1 this year. DeFi lending products have grown tremendously this year. However, recently, some media reported that the lock-up amount of Dharma, one of the mainstream lending products on Ethereum, plummeted by 74%, and users were unable to withdraw coins, which cast a shadow over the strong development of DeFi.
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DAI is the most lent asset
According to the statistics of DEFI PLUS, although the total lock-up amount as of August 6 has reached 461 million US dollars, an increase of about 75.95% from the beginning of this year, but in fact, the lock-up amount of the entire lending market has hit a new high since June 27 this year. After reaching a high of 602 million US dollars, it has been showing a downward trend, and it has dropped by about 30.59% so far.
From the perspective of the allocation of locked assets, in general, the number of locked positions of ETH is decreasing, while the number of locked positions of DAI is rising.
However, if it is converted into US dollars, then ETH is still the asset with the largest amount of locked positions. According to the loan statistics of LoanScan, as of August 7, the total loan amount of Maker, CompoundV1/V2, Dharma and dY/dX in the latest month is about 98.28 million US dollars, and the number of transactions is about 46,700 times. About $2103.
From the perspective of loan asset types, DAI is currently the most important loan asset, accounting for 69% of the total loan amount, followed by USDC and ETH, accounting for 20% and 11% respectively. Other loan assets mainly refer to ERC-20 Tokens account for less than 1%. The possible reason why DAI occupies the main lending market share is that Maker occupies an absolute dominant position in the lending market of Ethereum, while Mkaer only provides DAI lending. In addition, USDC is the one with the most loans among all fiat currency stablecoins, and it has successfully caught the ride of DeFi.
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Holding the most WETH Maker is the "central bank" of Ethereum DeFi
In the beginning, the DeFi lending products on Ethereum mainly focused on pledged ETH. Even in the current market structure that has been greatly developed, Maker, which has the largest share, only provides ETH pledges. But borrowing and lending in the encrypted world often involves two types of tokens. The most widespread form of tokens on Ethereum is ERC-20 tokens, while Ethereum’s native token ETH does not meet the ERC-20 standard. Therefore, in order to realize the fast transaction of ETH and ERC-20 tokens, it is necessary to wrap ETH into a representative that conforms to the ERC-20 standard. This is WETH (Wrapped ETH). The packaging process is 1:1 mapping, and Gas fees need to be paid.
In other words, all ETH lending-related products on Ethereum cannot bypass WETH, which also provides a unified window for the market to observe the real status of DeFi lending products, that is, the locked-up amount can be observed by observing the balance of WETH of each product. Although this is not exactly equal, the trend is consistent, that is, it is impossible for the WETH balance to be lower than the total lock-up amount. Given that the current market is dominated by Makers who pledge ETH, and the mainstream loan assets are DAI that can only be obtained by pledging ETH in Maker, so observing the performance of WETH on the chain is equivalent to observing the entire Ethereum DeFi loan product at the source. According to data from the Ethereum browser Etherscan, as of August 7, the total supply of WETH was about 1.63 million, scattered among about 42,000 addresses, and the total number of transactions reached about 2.33 million.
Among them, Maker is currently the largest holder of WETH, holding a total of 1.31 million, accounting for 80.24% of the total, much higher than other DeFi products. Secondly, dY/dX, Dharma, Nuo, and Compound hold 2.72%, 1.08%, 0.38%, and 0.17% of WETH respectively. Such a disparity in holdings can basically be regarded as Maker monopolizing the lending business of pledged ETH on Ethereum. Pan Chao believes that if Maker is compared to the central bank on Ethereum, which provides ordinary users with a discounted Dai loan window, then other loan products such as Compound are equivalent to commercial banks, which are second-level loans issued by Maker. Maker provides a fixed benchmark interest rate, and Compound is a flexible lending rate.
Specifically looking at the data on the WETH chain of each product, it can be seen that Maker’s WETH balance has dropped since April, from about 2.21 million in mid-March to the current 1.31 million, a drop of about 40.7%. In response, Pan Chao responded, “Due to the surge in demand for borrowing Dai in the past few months, Maker raised the benchmark interest rate in order to control the total supply and stabilize the price of Dai. Therefore, people who need to borrow money turned to secondary lending markets such as Compound, No direct borrowing from Maker." But he expects that after the price of Dai becomes more stable, Maker's benchmark interest rate will drop, and the demand and amount of Dai borrowing will increase at that time.
From the changes in the number of transactions of WETH, we can see that both the total number of transactions, the number of pledges, the number of loans, and the number of new addresses sent and received have all increased significantly compared to late July. This means that there have been more Maker participants recently, but the per capita loan unit price has dropped.
This is in line with the MakerCDP amount recently monitored by LoanScan, and the newly created CDP amount is basically less than $1. This change may be related to the activities of Coinbase. According to the previous report of the Block, the DAI activity launched by Coinbase Earn on July 26 has promoted the creation of more than 14,000 CDPs, which is about 40% of all Maker CDPs. The effect of the activity is obvious, but the retention in the future may be a test question for Maker.
Dharma, another major lending product on Ethereum, was previously reported by the media that locked assets had plummeted by 74%. On the 8th, Dharma decided to suspend new deposits and loans, and users can withdraw funds that are currently not locked. Judging from its WETH balance, it still has 17,377.
However, Dharma had a "blank 4 days" on July 24-27, and there was no on-chain record at all. According to LoanScan's monitoring, Dharma's latest loan occurred two weeks ago, and users have been unable to withdraw coins since then.
Dai Shichao, head of the DDEX market, said, "Dharma is a P2P model. It is a manual matching of borrowers and lenders. This process may wait for several days. The sudden drop in the lock-up amount is related to the fact that they stopped interest rate subsidies. There is no interest rate advantage, plus manual matching If the efficiency is low, people are not willing to play.” But Dai Shichao also said that after all, Dharma’s founding team is relatively high-quality, and it is also heard that Dharma is going to switch to the capital pool model, which is still worth looking forward to.
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ETH supply and demand imbalance, stablecoins DAI and USDC are popular
According to the statistics of LoanScan, Compound is currently the platform with the largest loan amount in the market. As of August 8, its loan amount has accounted for about 50% of the total market loan amount. However, Compound's WETH balance is very small, which is mainly related to its adoption of the cToken fund pool model, and its current main loan asset is no longer ETH. According to the statistics on its official website, DAI and USDC are currently the main lending assets favored by users, and the borrowing amount of ETH is very small, but on the contrary, on the loan side, the supply of ETH is the largest.
Dai Shichao said, "The difference in asset supply and demand will only affect interest rates, and a larger supply can only mean that more people save money and earn interest." LoanScan shows that the current deposit interest of ETH in Compound V2 is only 0.02%, which is far less than 11.94% of DAI and 9.68% of USDC, and the ratio of deposit interest and borrowing interest of ETH is the largest. If we examine the DAI situation of Compound in detail, according to the ranking of all addresses, Compound dai has 6.92 million DAI, accounting for about 9.11% of the total, which is the largest DAI balance among all addresses, and the balance in the address has been rising.
Moreover, the number of inbound transactions is significantly more than that of outbound, which is similar to the overall supply and demand situation. That is to say, whether it is ETH with less borrowing or DAI with more borrowing, there are more users earning interest on deposits than borrowing for other purposes. User.
CompoundUSD Coin’s address also exhibits a similar on-chain situation.
According to Dai Shichao’s observation, one of the main reasons why the main lending assets have become stablecoins DAI and USDC is that “the price of ETH fluctuates greatly, and borrowing stablecoins is equivalent to putting cash in Yu’ebao to earn interest, or similar to mortgaging US dollars. loan".
