Digital Asset Lending via Open Protocols Q1 2019

8 April 2019

The volume of digital assets borrowed via the four largest volume open lending protocols Compound, Dharma, dYdX and MakerDAO in Q1 2019 decreased 18.56% to USD 66.3 million compared to that of Q4 2018, which stood at USD 81.4 million. The two largest volume protocols, MakerDAO and Compound, saw decreased volume which largely dictated total volume. The two other protocols, Dharma and dYdX, had increased volume, although not enough to counteract decreases from Compound and MakerDAO. DAI, the MakerDAO stablecoin, garnered full adoption in all four protocols in Q1 and dictated the majority of borrow volume across the board.


Data source: Some or all data provided by Loanscan.io Lending Market Data API

  



Open Lending Protocols: Snapshot

Compound Protocol

The Compound team made its liquidity risk concerns public regarding the assets being used as collateral. The upcoming v2 release will attempt to address these issues with granular risk modeling, asset gateways and planned governance improvements. 


Q1 2019
 Compound
Loans
$25,326,989
Borrows
$3,807,326
Top Originating Platforms
 Compound
 Bloqboard
Collateral Supplied (same as Loans)
$25,326,989
Active Loans Outstanding (as of March 31, 2019)
$3,214,788
Number of Borrows
1087
Average Borrow Amount
$3,503
Protocol Collateral Ratio (as of March 31, 2018)
882%
Interest Rate Type
Variable
Most Borrowed Asset (Volume)
WETH ($1,841,013)
Largest Borrow
250,000 DAI ($250,000)
Largest Loan
800,000 DAI ($800,000)
Collateral Liquidated
$29,046
Borrows Liquidation Ratio
0.70%
Liquidation Penalty
5%

Data source: Loanscan.io Lending Market Data API
Note: 
1) All loans with a value of less than $1 have been excluded.
2) Digital asset prices are historical unless otherwise specified. 
3) Borrows liquidation ratio = volume of borrows liquidated divided by borrows.

Data source: Some or all data provided by Loanscan.io Lending Market Data API

Asset
Borrow APRs
Supply APRs
DAI
8.32% - 12.16%
2.06% - 5.0%
WETH
5.75% - 10.65%
0.09% - 1.2%
BAT
5.1% - 12.84%
0.01% - 2.01%
REP
5.0% - 5.91%
0.01% - 0.11%
ZRX
5.15% - 9.06%
0.02% - 0.74%



Dharma

Jumping headfirst into solving UX for decentralized finance (open finance) the Dharma team launched the alpha version of their Lever product, a margin trading platform. The initial stablecoin used against ETH was USDC but the team soon switched to support DAI following feedback from the market.  

Q1 2019
Dharma
Loans
$899,285
Borrows
$899,285
Top Originating Platforms
Dharma Lever
Collateral Supplied
$1,346,551
Active Loans Outstanding (as of March 31, 2019)
$577,468
Number of Borrows
756
Average Borrow Amount
$1,190
Protocol Collateral Ratio (as of March 31, 2019)
154%
Interest Rate Type
Fixed
Most Borrowed Asset (Volume)
DAI ($621,507)
Largest Borrow
93,686 DAI ($93,686)
Largest Loan (same as Borrow)
93,830 DAI ($93,830)
Collateral Liquidated
$6,919
Borrows Liquidation Ratio
0.44%
Liquidation Penalty

Data source: Loanscan.io Lending Market Data API
Note:
1) All loans with a value of less than $1 have been excluded.
2) Digital asset prices are historical unless otherwise specified. 
3) Borrows liquidation ratio = volume of borrows liquidated divided by borrows.

Data source: Some or all data provided by Loanscan.io Lending Market Data API



dYdX Protocol

The dYdX team made few announcements in Q1. According to the team they are completing final features and external security audits for the upcoming alpha launch of their new margin trading product. 

DDEX, the decentralized exchange built on the Hydro Protocol, became the third venue to offer support for dYdX margin tokens (sETH and LETH). 

Q1 2019
dYdX
Loans
$1,607,078
Borrows
$1,607,078
Top Originating Platforms
Expo
Collateral Supplied
$2,848,276
Active Loans Outstanding (as of March 31, 2019)
$71,284
Number of Borrows
1,767
Average Borrow Amount
$909
Protocol Collateral Ratio (as of March 31, 2019)
214%
Interest Rate Type
Fixed
Most Borrowed Asset (Volume)
DAI ($826,666)
Largest Borrow
28,071 DAI ($28,071)
Largest Loan (same as Borrow)
28,071 DAI ($28,071)
Collateral Liquidated
$310
Borrows Liquidation Ratio
0.02%
Liquidation Penalty

Data source: Loanscan.io Lending Market Data API
Note: 
1) All loans with a value of less than $1 have been excluded.
2) Digital asset prices are historical, unless otherwise specified. 
3) Borrows liquidation ratio = volume of borrows liquidated divided by borrows.

Data source: Some or all data provided by Loanscan.io Lending Market Data API

MakerDAO Protocol

The governance model of MakerDAO was tested with numerous voting proposals to adjust the stability fee for DAI generated via CDPs (Collateralized Debt Position). The fee was raised four times from 0.5% to 1.0% to 1.5% to 3.5% to 7.5%. Circulating DAI supply reached ~95m, just under the 100m debt ceiling, before the tide of DAI generation subsided after the March 22nd vote to increase the stability fee 4%. The sell pressure for DAI has made it tough to maintain the peg (1 USD) because there has been minimal natural demand to combat the investors and traders looking for ETH leverage.

Q1 2019
MakerDAO
Loans

Borrows
$59,994,999
Top Originating Platforms
CDP Portal
InstaDapp
Bloqboard
Collateral Supplied
$117,614,579
Active Loans Outstanding (as of March 31, 2019)
$88,499,048
Number of Borrows
12,794
Average Borrow Amount
$4,689
Protocol Collateral Ratio (as of March 31, 2019)
352%
Interest Rate Type
Variable
Most Borrowed Asset (Volume)
DAI ($59,994,999)
Largest Borrow
1,500,000 DAI ($1,500,000)
Largest Loan

Collateral Liquidated
$2,061,924
Borrows Liquidation Ratio
3.17%
Liquidation Penalty
13%

Data source: Loanscan.io Lending Market Data API
Note: 
1) All loans with a value of less than $1 have been excluded.
2) Digital asset prices are historical unless otherwise specified. 
3) Borrows liquidation ratio = volume of borrows liquidated divided by borrows.
4) MakerDAO has a high liquidation ratio because the whole borrow gets liquidated if the collateral drops below 150%. On Compound, only the necessary portion of the borrow gets liquidated to bring the borrow back up to 150%

Data source: Some or all data provided by Loanscan.io Lending Market Data API


Open Lending Protocols: Review Q1 2019


Compound
Dharma
dYdX
MakerDAO
Total
Loans
$25,326,989
$899,285
$1,607,078

$27,833,352
Borrows
$3,807,326
$899,285
$1,607,078
$59,994,999
$66,308,688
Top Originating Platforms
Compound
Bloqboard
Dharma Lever
Expo
CDP Portal
InstaDapp 
Bloqboard

Collateral Supplied
$25,326,989
$1,346,551
$2,848,276
$117,614,579
$147,136,395
Active Loans Outstanding
(as of March 31, 2019)
$3,214,788
$577,468
$71,284
$88,499,048
$92,362,588
Number of Borrows
1087
756
1,767
12,794
16,404
Average Borrow Amount
$3,503
$1,190
$909
$4,689

Protocol Collateral Ratio
(as of March 31, 2019)
882%
-
214%
352%

Interest Rate Type
Variable
Fixed
Fixed
Variable

Most Borrowed Asset (Volume)
WETH
($1,841,013)
DAI
($621,507)
DAI
($826,666)
DAI
($59,994,999)

Second Most
Borrowed Asset (Volume)
DAI
($1,461,437)
WETH 
($235,054)
WETH
($780,413)


Third Most
Borrowed Asset (Volume)
REP
($275,681)
USDC
($40,839)



Largest Borrow
250,000 DAI 
($250,000)
93,686 DAI
($93,686)
28,071 DAI
($28,071)
1,500,000 DAI 
($1,500,000)

Second Largest Borrow
200,000 DAI
($200,000)
50,000 DAI 
($50,000)
199 WETH
($24,990)
1,500,000 DAI 
($1,500,000)

Third Largest Borrow
185,414 DAI
($185,414)
250 WETH 
($34,755)
105 WETH
($15,196)
1,000,000 DAI 
($1,000,000)

Largest Loan
800,000 DAI
($800,000)
93,686 DAI 
($93,686)
28,071 DAI
($28,071)


Number of
Borrows Liquidated
412
77
2
366
857
Collateral Liquidated
$29,046
$6,919
$310
$2,061,924
$2,098,199
Borrows Liquidation Ratio
0.70%
0.44%
0.02%
3.17%

Liquidation Penalty
5%


13%


What to watch moving forward 

  

 

 

  

Disclosures

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of the date of publication, and are subject to change without notice. Borrowing and lending of digital assets on open protocols involves significant risks including technical risks of public blockchains, technical risks of open protocols, price volatility and illiquidity and may not be suitable for the majority of market participants. Bloqboard does not hold any positions in digital asset loans and borrows, but in the future may hold positions in assets and loans that are the subject of this report. In addition, employees and other associated persons may trade and hold positions now or in the future in the assets that are the subject of this report. As a result, Bloqboard, its affiliates, and its employees or other associated persons may be subject to certain conflicts of interest in connection with the provision of this report. Bloqboard will not be liable whatsoever for any direct or consequential loss arising from the use of this information.