DeFi loan monthly report | Maker even cut interest rates, lending platform arbitrage space shrink

In the past September, the entire digital currency market experienced a large fluctuation in the market. Due to the cyclical lock-in mechanism of the Staking platform, many investors suffered large asset losses (the money standard). The same impact has also affected most DeFi lockout platforms. According to data, in September alone, DeFi locks were valued at up to $1.28 billion, with a minimum shock of $977 million. As a result, MakerDAO, the leading platform in the lending market, successively lowered interest rates to stimulate normal market lending. demand.

DAppTotal conducted in-depth analysis of five mainstream lending products, including Maker, Compound_V1, Compound_V2, dYdX, and Nuo, and found that:

The total assets lending in September was US$68.8 million, a slight increase of 4.4% from August; borrowed assets totaled US$199 million, a slight decrease of 7.4% from August; outstanding loan assets totaled US$135 million, of which DAI included US$114 million. , accounting for 84.3%, USDC has 18 million US dollars, accounting for 13.4%.

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1. Borrowing platform borrowing interest rates tend to be the same, arbitrage space shrinks

Since August, Maker's borrowing rate has been adjusted from a high of 20.5%, adjusted five times, and adjusted to 10.5% at the end of September, and the latest round of voting to 8.5% has begun. Interestingly, as shown in the data below, while Maker continuously cuts the borrowing rate, the borrowing rate of CompoundV2 and dYdX_V2 and Maker are gradually getting closer. It is not difficult to see that Maker is the “central bank” of the DeFi lending market, and the lending market. The market regulation of other "commercial banks" has emerged.


Looking back at the market situation when the Maker interest rate was high in July, there was a big gap between the interest rate of Compound and dYdX and Maker, and the keen investors saw the arbitrage space. One possibility, the user will choose to lend the DAI from a platform such as Compound and then to Maker equal to returning the DAI at a lower cost. There is also a possibility that the user will choose to lend the DAI from Maker and put it into the Compound with higher deposit interest rate. arbitrage. However, as Maker continues to cut interest rates, the interest rate differentials of the three platforms are gradually shrinking, which makes the arbitrage space smaller and smaller for users.

Second, the borrowing market has a low utilization rate of funds and is vulnerable to market fluctuations.

According to DAppTotal data, ETH has 621 million US dollars in all locked digital assets, accounting for 61.6% of the total lock value, which is the largest lock asset in the current DeFi platform. As a result, in the case of a plunge in the market, the value of the overall market lock-up has fluctuated greatly. In severe cases, some users will be insolvent, resulting in a large number of liquidation orders.


On September 25th, only Maker single platform generated a clearing order of $6.22 million, which will undoubtedly put more pressure on users involved in mortgage lending. Usually, in order to reduce the direct impact of market volatility, the lending platform will ensure the healthy operation of the platform with a higher asset mortgage rate. As shown in the figure below, the average mortgage rate of the DeFi lending platform is around 355%, which will certainly bring certain stability guarantee to the lending platform. However, it is inevitable that the user asset utilization rate is low.


Obviously, in order to improve the efficiency of the use of funds in the overall DeFi lending market, it is necessary to do a good job in coping with the risk of fluctuations in the market. At present, the industry is doing two efforts:

1. Do more mortgage assets, reduce the impact of single asset fluctuations by adding more value digital assets, and the intention of Maker to mortgage multiple DAIs is exactly the same;

2. Circulating bridging, InstaDApp recently completed a round of financing and launched Bridge bridging products, in order to improve the liquidity between lending platforms, and then achieve relative stability through the market's own adjustment mechanism.