The total value held in Decentralized Finance (DeFi) protocols has surged by 271 percent in less than two months to transcend $7 billion for the first time, as per DeFi Pulse. If the current growth rate continues, DeFi would be worth over $27 billion by the end of this year.
Aave currently has the largest DeFi project with $1.51 billion locked, followed by MakerDAO with $1.42 billion held, Curve Finance with $1.15 billion, Yearn.finance with $845 million, Synthetic with $801 million, and Compound with $797 million locked.
Aave has recently grown as the top DeFi project after it received an Electronic Money Institution license from the U.K. Financial Conduct Authority, marking the increasing legitimacy of the industry.
Warned of DeFi Over-Exuberance Bullishness
Still, while DeFi’s dramatic growth pattern has been pushed by the recent rise of lending protocols that have messed with Maker’s long-standing dominance over the sector, just six protocols comprise more than 90 percent of the total locked capital in the space, as per DeFi Pulse.
While the multiple projects have immediately appealed to the crypto community in the middle of the 2020 DeFi bubble, few have been able to settle themselves and long-term leaders within the space.
The recent striking rise and fall of Yam Finance is an instance of the potential severity of contract risk; the company has also lost more than $750,000 worth of cryptocurrency.
DForce also faced a multi-million dollar hack attack back in April, but the stolen funds were later returned by the hacker and given back to investors.
In the meantime, industry experts have warned of extreme bullishness in the DeFi sector. Compound founder Robert Leshner has also recently tweeted:
If https://t.co/9Kn1cUvYq8 has $500 million less than 36 hours after launch, the industry needs to self-regulate and stop launching these meme farming games. https://t.co/IyJSw9zS43
— Robert Leshner (@rleshner) August 18, 2020
Earlier this month, Ethereum co-founder Vitalik Buterin also said: “You do not have to participate in ‘the latest hot DeFi thing’ to be in Ethereum. In fact, unless you *really* understand what’s going on, it’s likely best to sit out or participate only with very small amounts.”