The Decentralized Finance (DeFi) market has reached unseen levels after surpassing $3 billion in funds locked. Users seem to be leveraging the wide range of solutions provided by DeFi apps and this has produced a massive increase in the funds locked. Yield farming has also attracted a large number of users that were searching for returns on their investments.
DeFi Market Continues Growing
The DeFi market has recently reached $3 billion in funds locked. This is a new record established by this industry that seems to be attracting every single day new users. One of the reasons behind this growth in DeFi apps and solutions is related to yield farming.
It is worth mentioning that it took several years for the DeFi market to reach the $1 billion mark. However, since that moment, things accelerated and the market surpassed $2 and $3 billions in funds locked, showing the high interest from users in the industry.
Yield farming is an activity in which investors can earn interest on their crypto and also receive incentives for providing liquidity. Users will be able to lend their crypto funds and receive a return for their services.
At the moment, the two most popular projects that allow for yield farming are Compound and Aave. You will be able to lend your capital to earn interest in your deposit and participating in the DeFi market.
Furthermore, there is an added incentive to users to start yield farming in the DeFi market. This is related to the COMP cryptocurrency provided by Compound. Users that lend and borrow on Compound will receive COMP tokens. Each COMP token is currently worth $159 and it has a market valuation of $406 million.
Of course, the risk here is that the DeFi platform would experience a massive hack after exploiting a bug. Another risk is related to the fact the tokens they can receive as an additional interest could end up being simply worthless tokens rather than valuable assets.
If the current craziness would eventually become similar to the Initial Coin Offering (ICO) period, then we may see many of these tokens falling more than 90% and becoming worthless for users.
At the moment, Maker is the dominant DeFi protocol with 21% of the market. This is followed by Compound and Aave, which have been growing in recent months. Synthetic and Curve FInance are also growing and expanding.