It’s time for our weekly analysis of the DeFi market. We will review how this sector of the cryptocurrency landscape fared for the past 7 days, how it compares to the overall market and we will take a look at one important asset of this matter. Let’s begin:
A significant drop took place in the early hours of April 30th, as BTC dropped nearly $1,000 (10.63%) in the course of six hours. DeFi experienced a similar movement, losing around $84 million in TVL but, as usual, DeFi instead took 16 hours to reach the lower point of the drop. What comes as new is that DeFi grew only by 6% in the entire week, while the entire cryptocurrency saw an overall increase of 11.7%, almost as double as DeFi. We will have to wait and see how long it takes for DeFi to catch up with the growth in crypto.
For this week’s second part, we will look at MakerDAO, the most prominent platform in terms of DeFi (as it holds the most value locked in smart contracts) and a go-to for entering the environment. MakerDAO has cemented its place with over 55% dominance over the entire DeFi TVL and did it by offering an easy-to-access and user-friendly credit platform on Ethereum.
Given that it is supported by Dai, a stablecoin pegged to the USD, users can be confident that their credits and loans will not devaluate over time or raise interests out of their control. The users use Maker to create a vault that uses ETH or BAT as collateral, and they generate interests over their credit on Dai. Once the borrowed amount and the accumulated debt in Dai is paid, the tokens are burned in order to control circulation.