- The DeFi money market has reached record heights.
- DeFi lending and liquid staking are DeFi’s two biggest sectors.
- Aave is the biggest DeFi lending protocol.
DeFi’s lending market is in full sprint.
The sector’s total value locked, or TVL, has risen to a record $130 billion, cementing it as the largest DeFi sector ahead of liquid staking, DefiLlama data shows.
TVL is a measure of investor deposits in a blockchain or DeFi protocol, and the current record means DeFi lending’s locked capital has more than doubled since mid-April, the lowest point of the crypto market this year.
The swelling DeFi lending TVL is running on multiple currents, including favourable policy shifts and tokenised real-world assets turning illiquid holdings into collateral. The growth of the stablecoin market and the emergence of looping strategies that turbocharge yields have also contributed to the TVL spike.
Major DeFi lending protocols like Aave, Morpho, and Euler have become liquidity magnets amid the sector’s expansion, gobbling up huge earnings from transaction fees.
Together, these protocols have forged the biggest growth engine for DeFi and have become the major saloons for the onchain money market.
Here are the three biggest lending protocols drawing the spotlight.
Aave
Aave’s TVL is more than $68 billion, the largest of any DeFi lending protocol.
It’s a pool-based lender. That means deposits are in common liquidity pools, and borrowers can access loans from the pool by depositing collateral.
Euler and Justlend are some of the other major pool-based DeFi lending protocols.
In August, Aave relaunched its institutional platform that allows big-money players to borrow against their tokenised assets.
Morpho
Morpho is the second-largest DeFi lending protocol, but its TVL is five times smaller than Aave’s.
Like Aave, it has common liquidity pools for deposits, but it also features a matching system that pairs lenders and borrowers.
In June, Morpho launched a new version of its protocol that offered fixed-rate loans to encourage more institutional users.
JustLend
JustLend holds more than $5 billion in TVL.
It’s also a pool-based lender like Aave, but the protocol is only available on one blockchain, Tron, whereas Aave has been deployed on 18 different blockchains.
In August, the protocol began accepting USD1, the dollar-pegged stablecoin from US President Donald Trump-linked DeFi protocol World Liberty Financial
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com.
