Ether Up: New Record Set for Total Value (in ETH) Locked in DeFi

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Signals of growth continue to light the way forward for the Ethereum ecosystem, with the latest being a newly established record for the total value locked in decentralized finance projects when that value is denominated in ether (ETH).

That’s per tracker site DeFi Pulse, whose “Total Value Locked in DeFi” dashboard shows the fresh milestone was achieved on October 14th when the TVL in ether hit just shy of the 3 million ETH mark for the first time ever.


That’s not to say that precisely 3 million ether are currently locked up in the space or that ETH is the only money used in DeFi. Per DeFi Pulse, the actual amount of locked up ETH is closer to 2.2 million right now, and DeFi projects like the Lightning Network rely on only bitcoin at present.

Yet the TVL in ether metric is insightful because the vast majority of that gap between the 2.2 million ETH currently locked and the new 3 million TVL (ETH) record is comprised of Ethereum-based ERC20 tokens on Ethereum dApps, meaning the activity is mostly centered around the leading smart contract platform.

Indeed, of the top 20 projects on the DeFi Pulse activity leaderboard, only one isn’t Ethereum-based: the aforementioned Lightning Network.

Putting the Growth Into Perspective

When denominated in U.S. dollars, the TVL in DeFi reached an all-time high back in June when the ETH price hit its year-to-date high of $335 USD. That summer spike pushed the TVL in USD to nearly $700 milion, a point that hasn’t been matched again yet.

Currently hovering around $185, the ether price is now almost half of its latest high. Yet the TVL in ETH has increased 900 percent since the June rally, from approximately 300,000 ETH to 3 million ETH.

More simply put, the ether price may be acutely down but there is now more ETH in DeFi than ever before — a point worth considering as ether’s status as money continues to be grappled with by a widening array of stakeholders. Notably then, the monetary base of ether gets smaller as more gets locked in DeFi.

A considerable swath of the growth in the DeFi ecosystem has been built around or inspired by that ecosystem’s reigning champ, Maker, which popularized a dApp portal for automated loans of Dai stablecoin. In turn, novel projects have brought their own new users and ETH into arena.

For example, consider the rising projects of Compound and InstaDApp, which are respectively second and fourth on the DeFi Pulse leaderboard at present.

Both live in the gravity of Maker — Compound’s cDai tokens innovate on Maker’s Dai, and InstaDApp offers a bridge for users to easily move between Maker and Compound. And both are becoming increasingly popular in their own right as cryptocurrency lending gain more attention.

Call it the DeFi effect, if you will. As more projects leverage each other’s open source, “Open Finance” innovations, more users are introduced to more projects in the space, which creates a sort of feedback loop for growth in which many of the top DeFi platforms are directly or indirectly benefiting from each other.

All DeFi Eyes on Maker’s MCD

To date, Maker’s automated loans, or “collateralized debt positions” (CDPs), have only been able to use ether as collateral.

That dynamic is set to change next month upon the highly anticipated rollout of the Multi-Collateral Dai (MCD) system, which is poised to go live on November 18th and will let Maker users take out Dai loans using collateral beyond just ETH.

Moreover, the MCD activation will also launch the Dai Savings Rate (DSR), which will provide interest earnings to users who hold Dai in a smart contract and undoubtedly bring more newcomers to DeFi.

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William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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