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Lending & Borrowing
MakerDAO is a borrowing platform built on Ethereum. It allows users to open a collateralized debt position (CDP) by posting ETH as collateral to borrow against.
MKR and DAI are its two tokens.
Lent funds are paid in DAI, which is a stablecoin pegged to the dollar.
There is a stability fee, paid in MKR, users need to pay on their CDP to close it (the current rate is 3.5%). The MKR used to pay is subsequently burned. However, more MKR can be issued under a forced recapitalization.
MKR is also used for governance.
The value of the locked up collateral must be greater than 150% of the DAI borrowed. This equates to a max LTV of ~67%. If this threshold is breached, the collateral is liquidated to cover the value of the lent DAI.
MakerDAO Growth
MakerDAO accounts for almost 90% of total USD value locked in decentralized finance projects and has seen
impressive growth over the past few months. MakerDAO recently put out a report, which showed there were
nearly 8,200 unique addresses with a non-negligible Dai balance. In addition, they observed 20% monthly
growth for holders and active addresses. Below, we charted the amount of ETH staked in MKR and the price of
ETH since the start of 2018. It's important to highlight that, as a lending platform, Maker remained resilient
even as the price of the asset it lends against (ETH) lost much of its value over the course of 2018.
Sources: DAI In Numbers, DeFi Pulse, Mike McDonald's Github
Compound is a protocol for algorithmic, efficient Money Markets on Ethereum.
It does not have its own token.
Users can supply assets to the protocol and earn interest, or borrow from protocol and pay interest. A user can borrow any asset, as long as they maintain a Supply Balance that's 1.5x their Borrow Balance as collateral.
Each market has dynamic interest rates, which float in real-time as market conditions adjust.
Interest accrues each Ethereum block (every ~15 seconds), which means a users balance will increase by (1/2102400) of the quoted interest rate.
Every user that supplies an asset to the protocol earns the same interest rate, each block, regardless of when they originally supplied the asset.
Compound keeps a small residual of all interest that moves through their system.
Compound Finance Growth
Since Compound launched their money market protocol at the end of September 2018, they've seen some
meaningful growth across users borrowing, REP, DAI, and Wrapped Ether (WETH). They currently have over $24
million worth of assets held as collateral and recently announced the next generation of their protocol. This next
version will include granular risk modeling, more asset gateways, and planned governance improvements.
Sources: Compound Finance, DeFi Pulse
Dharma is a platform for building lending products on Ethereum.
Dharma Lever is one these products and provides instant margin loans for traders.
It does not have its own token.
It facilitates peer-to-peer crypto lending by allowing two parties of a loan to be discoverable.
Offers users the ability to borrow and lend crypto assets directly from their personal wallets (hardware, hosted, or otherwise).
Borrowers can customize their desiredloan terms, including asset type, collateral, and duration. Once they trustlessly lock up collateral in smart contract, they receive principal instantly.
Lenders set a risk profile by specifying their desired loan terms.
Dharma Lever supports ETH-based assets & will soon add support for BTC.
Dharma Lever Growth
While Dharma isn't fully live to the public yet, in January they released their Alpha. This made it possible for
users granted early access to borrow and lend ETH on their platform. In March, this was expanded to DAI as
well. As you'll see on the following slide, Dharma is currently subsidizing the market to gain traction, with a
cost to borrow that's lower than a cost to lend. Using ETH as an example, this means that early access users
can currently lend to Dharma and earn 4%, and get charged to borrow from Dharma at 0.10%.
Sources: Dharma Lever
Lending & Borrowing Rates
To help put each of these platforms into perspective, we've laid out the borrowing and lending rates for each below.
Sources: Compound Finance, DeFi Pulse, MakerDAO
Disclaimer: This is not an investment advice. Please do your own research before investing in any avenue. The information contained in this post is for informational purposes only.
MKR and DAI are its two tokens.
Lent funds are paid in DAI, which is a stablecoin pegged to the dollar.
There is a stability fee, paid in MKR, users need to pay on their CDP to close it (the current rate is 3.5%). The MKR used to pay is subsequently burned. However, more MKR can be issued under a forced recapitalization.
MKR is also used for governance.
The value of the locked up collateral must be greater than 150% of the DAI borrowed. This equates to a max LTV of ~67%. If this threshold is breached, the collateral is liquidated to cover the value of the lent DAI.
MakerDAO Growth
MakerDAO accounts for almost 90% of total USD value locked in decentralized finance projects and has seen
impressive growth over the past few months. MakerDAO recently put out a report, which showed there were
nearly 8,200 unique addresses with a non-negligible Dai balance. In addition, they observed 20% monthly
growth for holders and active addresses. Below, we charted the amount of ETH staked in MKR and the price of
ETH since the start of 2018. It's important to highlight that, as a lending platform, Maker remained resilient
even as the price of the asset it lends against (ETH) lost much of its value over the course of 2018.
Sources: DAI In Numbers, DeFi Pulse, Mike McDonald's Github
It does not have its own token.
Users can supply assets to the protocol and earn interest, or borrow from protocol and pay interest. A user can borrow any asset, as long as they maintain a Supply Balance that's 1.5x their Borrow Balance as collateral.
Each market has dynamic interest rates, which float in real-time as market conditions adjust.
Interest accrues each Ethereum block (every ~15 seconds), which means a users balance will increase by (1/2102400) of the quoted interest rate.
Every user that supplies an asset to the protocol earns the same interest rate, each block, regardless of when they originally supplied the asset.
Compound keeps a small residual of all interest that moves through their system.
Compound Finance Growth
Since Compound launched their money market protocol at the end of September 2018, they've seen some
meaningful growth across users borrowing, REP, DAI, and Wrapped Ether (WETH). They currently have over $24
million worth of assets held as collateral and recently announced the next generation of their protocol. This next
version will include granular risk modeling, more asset gateways, and planned governance improvements.
Sources: Compound Finance, DeFi Pulse
Dharma Lever is one these products and provides instant margin loans for traders.
It does not have its own token.
It facilitates peer-to-peer crypto lending by allowing two parties of a loan to be discoverable.
Offers users the ability to borrow and lend crypto assets directly from their personal wallets (hardware, hosted, or otherwise).
Borrowers can customize their desiredloan terms, including asset type, collateral, and duration. Once they trustlessly lock up collateral in smart contract, they receive principal instantly.
Lenders set a risk profile by specifying their desired loan terms.
Dharma Lever supports ETH-based assets & will soon add support for BTC.
Dharma Lever Growth
While Dharma isn't fully live to the public yet, in January they released their Alpha. This made it possible for
users granted early access to borrow and lend ETH on their platform. In March, this was expanded to DAI as
well. As you'll see on the following slide, Dharma is currently subsidizing the market to gain traction, with a
cost to borrow that's lower than a cost to lend. Using ETH as an example, this means that early access users
can currently lend to Dharma and earn 4%, and get charged to borrow from Dharma at 0.10%.
Sources: Dharma Lever
Lending & Borrowing Rates
To help put each of these platforms into perspective, we've laid out the borrowing and lending rates for each below.
Sources: Compound Finance, DeFi Pulse, MakerDAO
Disclaimer: This is not an investment advice. Please do your own research before investing in any avenue. The information contained in this post is for informational purposes only.
