Whether one likes or distrusts stablecoins, their growth remains both impressive and surprising at the same time. Tether is gaining a lot of momentum on the Compound DeFi platform. Balances now exceed over $200 million, and there is more growth ahead.
Compound is Booming
In the Ethereum ecosystem, DeFi is the talk of the town. it provides access to a variety of financial services through relatively intuitive interfaces, Most users were crypto holders before, but it seems to be a matter of time until the masses flock to this industry.
One popular project as of late is Compound. The DeFi platform noted impressive growth, both in terms of total amount locked up and the value of its native token. More specifically, there is roughly $400 million worth of cryptocurrency and stablecoins on Compound today. This coincides with the COMP token price surge of 160% in recent days.
Contributing to the success of Compound are two key assets. On the one hand, there is Ethereum, which makes a lot of sense. Secondly,Tether’s USDT – a very popular stablecoin issued on the Ethereum blockchain – is finding its way to this platform. At this time, over $200 million in USDT is stored on Compound, a figure that is likely to rise in the coming months.
Compound Strategy Lead Calvin Liu adds:
“Tether is an extremely useful asset in the Compound ecosystem, and has quickly become one of the most liquid markets in the Compound protocol and accordingly across all of DeFi. USDt’s growth on Compound has been faster than the growth of any other asset in the protocol.”
The Dominance of Tether in DeFi
Users seem to prefer using this stablecoin for DeFi services. With a projected 11% return per annum on Tether balances, it is evident that there is good money to be made. Borrowers are willing to pay over 17% interest to get their hands on additional USDT, which is quite telling in its own regard.
This is not unique to Compound either. Across all of decentralized finance, USDT is providing ample liquidity compared to any other asset on the market. As demand for the token keeps increasing, and the interest rates remain high, it seems likely that this rate of growth will continue. For other stablecoins, there is a very steep uphill battle ahead.