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Crypto Finance: Decentralized Lending Soars, Staking Gains Traction

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Fredrik Vold

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Fredrik Vold

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Last updated:

June 26, 2023

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Despite having been around for quite some time already, decentralized lending services may now finally be about to break into the mainstream – at least within the cryptoverse – a new report suggests. Moreover, crypto staking is another income-generating practice that is gaining traction in the space.

According to blockchain company Circle’s Crypto Retrospective report for the second quarter of this year, the sum of loans from providers like Maker, Compound, Dharma, and dYdX increased by as much as 140% in the second quarter, compared to the previous quarter.

The report noted that strong growth in activity on the Compound platform was responsible for a significant portion of the overall increase, combined with the launch of dYdX’s mainnet. According to the report, Compound’s growth came at the expense of established players like Maker, which saw its share of loans outstanding fall by 25%.

Decentralized lending performance:

San Francisco-based Compound Labs, Inc is among the newer companies that are working to develop a “money market” for cryptocurrencies. Such a market enables crypto holders to deposit their coins to earn interest, or borrow coins from others in exchange for paying interest, similar to how traditional banks work.

Crypto staking jumps 790%

While crypto lending is seemingly experiencing increased interest, crypto staking is also showing positive signs.

According to the same report, the value of cryptocurrencies locked up in staking networks grew by 12% quarter-over-quarter, or a whopping 790% year-to-date. In total, USD 6.5 billion are reportedly now locked up in these networks to earn staking rewards.

Top among all staking coins is EOS, where 48% of the total supply is locked up for staking purposes. Interestingly, EOS ranks as the top staking coins despite offering a fairly low staking yield of 1.84%. Citing crypto analysis site Messari, the report even said that the “real staking yield” for many coins, including EOS, is in fact negative when adjusting for the circulating supply inflation.

Staking yield and “real staking yield” of top crypto staking networks: