Portfolio company TradeBlock released a report examining the DeFi space, yield farming, and in particular the possible value capture of these tokens.
The market capitalizations of the leading DeFi tokens have hit an all-time high recently. While many of the larger cap DeFi tokens were launched a few years ago, such as Maker Dao, investor enthusiasm has increased considerably in recent weeks. DeFi tokens have seen a run-up in demand as the platforms behind these token offer considerable yields. Yield bearing tokens have outperformed over the year as investors have clamored for yields in the digital currency space that are often magnitudes higher than in the traditional world. With the Fed keeping interest rates near zero, traditional financial products offer abysmal yields. There now exist various digital currency products that offer fixed and variable yields–often times hundreds of basis points higher than in the traditional markets. Among the DeFi tokens, Compound’s newly launched governance token, COMP, has seen the greatest increase in interest and trading activity. Compound’s platform, which serves as a lender/borrower for digital currency markets, has seen the greatest amount of ETH deposited on its platform as well as the greatest market cap of any DeFi token. Additionally, Compound’s loan originations have grown at an incredible pace, and the platform has now originated more than $350 million in loans YTD.