Binance Research unveils its latest report on the lending industry, revealing remarkable growth in lending protocols amidst market setbacks, highlighting the dominance of centralized finance (CeFi) lending and the surprising discrepancy between total value locked (TVL) and daily active users (DAU).
The lending industry seeing resilient growth
The report reveals a noteworthy 71.7% increase in the number of lending protocols established over the past year. This growth indicates that builders within the crypto space remain undeterred by the current market turmoil, further solidifying the industry’s potential.
However, the report also sheds light on a contrasting trend. While the number of lending protocols increased, the total borrowed amount represented a 67.8% decrease, indicating a decline in adoption. This intriguing finding suggests that users are becoming more cautious when it comes to borrowing against their crypto assets.
Strong VC interest in lending projects
According to the report, venture capitalists (VCs) have shown substantial interest in the lending sector. Over the past four quarters, a total of 45 lending projects successfully raised funds.
Interestingly, traditional centralized finance (CeFi) lending projects managed to secure 60.1% more funding than their non-CeFi counterparts, despite the latter having ten times more projects in existence.
This indicates that VCs are recognizing the potential of CeFi lending platforms, possibly due to their established infrastructure and regulatory compliance of some of these projects. The report also hints at the potential for significant growth in the non-CeFi lending space, given the multitude of projects striving to make an impact.
Top performers in the lending landscape
The report highlights the leading decentralized lending protocols in terms of TVL. Aave emerges as the frontrunner, boasting an impressive $5.9 billion TVL. Alongside Aave, JustLend and Compound secure the second and third spots, respectively, in terms of TVL.
What’s more, the researchers also made an intriguing observation: high TVL does not always correlate with high daily active users (DAU).
Despite Aave’s dominance in terms of TVL, Radiant’s DAU surpassed Aave’s multiple times throughout the year, indicating that the metric for measuring user engagement and adoption is not solely reliant on TVL figures.
Binance Research’s report on the lending industry showcases the sector’s ability to thrive amidst challenging market conditions. Despite a decrease in adoption, the growth in the number of lending protocols demonstrates the resilience of builders within the crypto space.
Furthermore, the report underlines the significant interest venture capitalists have displayed in lending projects, particularly in the CeFi sector. However, the discrepancy between TVL and DAU emphasizes the importance of considering multiple metrics when evaluating the success and adoption of lending platforms.