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Research Supports The Growth Of Open, Decentralized Financial Tools

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According to a recent research report by Bloqboard, focusing on digital asset lending in 2018 via open protocols, active loans have skyrocketed by 1,200 percent from December 31st, 2017 to December 31st, 2018 - equating to $72 million at the end of the year.

Similarly, Bloqboard’s analysis follows recent disclosures by Genesis Capital - the investment arm of Grayscale - that detailed how they originated $1.1 billion in cryptocurrency loans in 2018.

Decentralized lending protocols operate as open-source standards, that enable wider access to lending tools and interoperability. Platforms deploy various methods for managing the lending/borrowing process, and represent ways for mainstream audiences to tap into public blockchains.

While open lending protocols remain obscure to the mainstream and are comparatively just a fraction of the traditional credit market, they are increasing in adoption. The report highlights how out of the four primary protocols they analyzed - MakerDAO, Compound, dYdX, and Dharma - roughly $251.4 million was originated in lending throughout 2018. They measured originations as the total sum of borrowed and loaned digital assets.

MakerDAO dominated among the other platforms in total originations, accounting for roughly 81.4 percent (~$204.6 million) of the total. MakerDAO is one of the more intriguing open protocols as it employs a stablecoin Dai (pegged to the USD) that is ‘minted’ when users send the underlying collateral, Ether, to the collateralized debt positions (CDPs) of Maker - a collection of smart contracts that lock the over-collateralized Ether in exchange for Dai.

Maker CDPs currently have locked up approximately 1.9 percent of the total circulating supply of Ether, equating to more than 2 million ETH in collateral.

Interestingly, there are no ...

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