The crypto-based finance sector, or decentralized finance (Defi), has become an integral part of the cryptocurrency economy. It offers users the ability to trade digital assets and lend crypto without the need for a third party. In addition, it allows them to issue stablecoins. In the past 12 months, the Defi lending industry has seen a lot of changes. Several loan applications, such as Terra’s Anchor Protocol, have failed and 71.95% of the total value locked in Defi loan protocols has been lost.
From $37 Billion to $10 Billion: The Top Five Defi Lenders Then and Now
Last year, around this time, the total value locked (TVL) for the decentralized finance loan protocols was $37.41 billion. The Aave Protocol was the most dominant in the industry, with a TVL of $12.87 billion. An Archive.org snapshot from January 10, 2022 shows that Aave’s TVL was more than that held by the top five Defi loan protocols at the time.
The data shows that five of the top protocols changed in the mid-term. On January 17, 2023, the list included Aave ($4.58 billion), Justlend ($3.02 billion), Compound ($1.85 billion), Venus ($813.63 million) and Morpho ($221.59 million). Currently, the combined TVL for the five Defi protocols has been estimated at $10.49 billion.
On January 10, 2022, Terra’s Anchor Protocol was valued at $8.5 billion. But today, the Defi protocol has been reduced to dust. Anchor was one of the key components of the Terra ecosystem, with holders of Terrausd (UST) being able to deposit UST at a 20% annual return rate that compounded daily.
But in May 2022, UST renounced the $1 peg. Today, the amount is just $2 million. Compound had the third largest TVL in terms of Defi lending protocols at the time, with a TVL of $8.09 billion. On January 17, 2023, Compound’s TVL has been cut to $1.85 billion.