DeFi

Aave And Anchor Protocol Dominate DeFi Lending In Different Ways

Lending remains a crucial aspect of the decentralized finance industry. Although Anchor has the highest Total Value Locked today, Aave is moving up the rankings once again. It will be interesting to see if the top TVL spot will change hands over the coming weeks. 

Can Aave Mount A Comeback?

It has been a while since Aave dominated the DeFi lending landscape. It is still the most prominent lending protocol on the Ethereum blockchain, well ahead of Compound, Iron Bank, Notional, and B.Protocol. One can argue Aave is the most relevant lending project on Ethereum DeFi altogether, especially with the recent V3 protocol upgrade. Funds are moving around between the old and new smart contracts, confirming users have awaited some of these updates. 

Findings by Cryptomonday.de indicate things are progressing nicely for Aave in the price department. More specifically, the AAVE currency saw its market cap surpass $2.5 billion, although it has retraced to below $2 billion ever since. All crypto markets remain fairly bearish throughout 2022, negating any growth. Even so, Aave remains the lending protocol with the highest market cap, well ahead of Maker, Celsius Network, and Kava. 

The dominance of AAVE is rather outspoken, even if Aave is not the top global decentralized lending protocol. Growing competition in the lending space showcases rising demand for such protocols and the rates they provide. These protocols provide lending and borrowing functionality and issue revenue to users who put up assets as collateral. Aave is well ahead of the competition, with an average daily revenue of over $500,000. 

It will be interesting to see what happens to Aave and its AAVE asset over the coming months. The protocol has lost the TVL top spot to Anchor Protocol on the Terra ecosystem. However, it maintains the lead for token market cap, as ANC is valued at roughly one-third of AAVE. Anchor Protocol has a 0.04 market cap/TVL ratio, whereas Aave sits at 0.17. Both ratios appear rather low, although they do not indicate future price potential. 

Innovation Remains Crucial

The race between Aave, Anchor Protocol, and other lending protocols hinges on future innovation. There is much room for future innovation in this space, as developers can improve upon the current lending and borrowing rates and requirements. While DeFi is still in the infancy stage, it will be intriguing to see what either protocol has in store for the future. 

Aave has hinted at exploring a few different options, including cross-chain interoperability. Aave already runs on Ethereum, Avalanche, and Polygon. However, the developers want to explore compatibility with even more networks, although it remains unclear which those would be. 

For Anchor Protocol, the protocol resides on Terra and Avalanche. It is a relatively stable ecosystem that notes a small monthly TVL increase of 3.74%. It, too, may explore the option of establishing a presence across multiple blockchains, although nothing has been made official yet. Things are bound to get interesting where DeFi lending is concerned, for sure, which will ultimately benefit the users. 


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JP Buntinx

JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.

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