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Compound's COMP token became the largest decentralized finance (DeFi) token by market capitalization only days after its June 16 launch. Compound, developed on the Ethereum blockchain, allows anyone holding a supported crypto-asset to deposit it into a Compound smart contract where it joins a liquidity pool and starts generating interest. The interest comes from other users that borrow funds and pay interest for the loans. Users can also borrow crypto from Compound by putting up collateral above a threshold defined by the project. https://decrypt.co/resources/Compound-defi-ethereum-explained-guide-how-to

Opium Finance has released collateralized debt obligation products (CDOs) for Compound Finance's automated lending markets. Opium is a decentralized finance (DeFi) protocol that allows for creating, settling, and trading decentralized derivatives. Compound Finance is an algorithmic, autonomous interest rate DeFi protocol that allows for the creation of money markets on the Ethereum blockchain. Investors can put up the Compound debt token cDai - and soon Uniswap tokens - to diversify exposure to DeFi lending markets. Opium's product pays out structured returns to both a senior and junior risk tranche in exchange. The former tranche offers a 7% fixed return on DAI (a crypto-backed USD-pegged stablecoin) at maturity, while the latter pool offers a variable rate paid out after filling up the senior tranche's return.

USD Coin (USDC) has broken the $1 billion market capitalization barrier. Multiple factors are driving recent growth, including COVID19-related currency volatility across many developing economies, the addition of support for blockchains other than Ethereum (with Algorand being the first to join) and the adoption of USDC by Compound (a decentralized finance (DeFi) lending crypto-asset lending platform. https://Compound.finance/

"Compound is a decentralized, blockchain-based protocol that allows you to lend and borrow crypto. COMP is its native utility token that gives you power in governing the protocol."

Basic Attention Token (BAT) - a token used to incentivize digital ad consumption on the Brave browser - was the most used coin in DeFi in Q2 2020. BAT's volumes in DeFi came to $931 million, over $300 million more than ether. The token's overnight popularity came from generating the best return on Compound, not because of any feature of BAT.

Members of the decentralized finance (DeFi) ecosystem are turning to USD Coin USDC in order to interact with DeFi protocols either by earning high-yield income on lending protocols like Compound and Aave. Users are also providing liquidity to liquidity pools like Uniswap and Curve, the latter of which offers stablecoin to stablecoin trading. Following the launch of Curve's governance token, CRV, on August 14, there was a surge in USDC on-chain activity. The launch of the token has also helped Curve earn the third place in terms of value locked, following Aave and Compound, with $1.27 billion locked.

DeFi (decentralized finance) encompasses anything that provides loans, borrowing, staking or some reward to the user for putting in capital to the system. It removes all the layers of intermediaries and middlemen that would normally be involved through the use of smart contracts. The DeFi space remains heavily reliant on the Ethereum blockchain (which has famously struggled to scale to onboard mass users). However, once Ethereum transitions to ETH 2.0 using the Proof of Stake consensus mechanism, the number of users it can onboard will be potentially without limitation. Moreover, other serious contenders are further building out the space, such as Compound, and Maker DAO, propelling DeFi to more and more users.

Against its wishes, Tether is now a New York-regulated financial firm. It will grudgingly have to make its financials public. Assuming they like what they see come reporting time, Tether skeptics may start to rethink their distaste. DeFi protocols like Maker and Compound may even lighten their tether penalties, thus gobbling up more tether. And who knows, maybe Tether will, after a taste of oversight, try to come in from the cold and apply for a money transmitter license like everyone else. Whether it will qualify is another matter. But stranger things have happened.

"At the end of the day, all this uncertainty about the possible outlawing of stablecoins, unsustainable yield-farming initiatives powered by token printing, smart contract risk, oracle risk, utility of DeFi apps if stablecoins are not allowed, increased competition from EVM-compatible chains like Binance Smart Chain and RSK, and many other aspects of the Ethereum economy trickles down to the underlying ETH asset itself, which has the compounding impact of making ETH less useful as money and, therefore, less useful as collateral."

DeFi potentially offers much higher returns to savers than high-street institutions. Compound, for example, has been offering an annualized interest rate of 6.75% for those who save with stablecoin Tether. Not only does a user gain interest, but it also receives Comp tokens, an added attraction. With two-thirds of people without bank accounts in possession of a smartphone, DeFi also has the potential to open up finance to them.

Tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion's share of stablecoins in circulation, but two smaller rivals are trouncing it in crypto's hottest market this year, decentralized finance (DeFi). Measured by the total value locked in six of the most popular DeFi protocols - Compound, Maker, Uniswap, Curve, Aave and Balancer - USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. USDC and DAI have market caps of $2.74 billion and $608 million, respectively.

Decentralized lending and borrowing protocol Aave has taken the number one slot in total value locked (TVL), snatching that position from MakerDAO. Aave's TVL, or the total amount of crypto-assets deposited into the protocol for lending and borrowing purposes, is now $1.45 billion, according to tracker DeFi Pulse. Aave is the second project to beat MakerDAO in TVL. On June 20, Compound overtook the DAI stablecoin issuer, with about $500 million in TVL at the time as compared to MakerDAO's $486 million. The yield farming craze in recent weeks has shot up the TVL of almost all DeFi protocols, to currently stand at over $6.9 billion. In February, that amount was only $1 billion.

Aave currently comprises the largest DeFi project, with $1.51 billion locked, followed by MakerDAO with $1.42 billion, Curve Finance with $1.15 billion, yEarn Finance with $845 million, Synthetic with $851 million and Compound representing $797 million.

Decentralized apps experienced a dramatic surge in activity in June 2020, led by a $500 million increase in DeFi protocol Compound's balance sheet. Curve serves as an automated money market that can only support swaps between different stablecoins and "wrapped" cryptocurrency tokens. Curve can offer more competitive slippage and lower fees for trading virtual assets. Leading non-custodial exchange Uniswap also saw increased activity because of a dramatic rise in Compound's COMP token trading volumes. Kyber Network, which connects fragmented tokenized assets by facilitating seamless transactions, and decentralized exchange protocol 0x also reported increased activity.

DeFi meme coin YAM has succumbed to a bug within its rebase function, meaning the coin has lost control of its on-chain governance feature. Yam was an elastic supply crypto-asset, where the supply expands and contracts in response to market conditions with the aim of pegging the value of a Yam to the U.S. dollar. 10% of each supply expansion ("rebase") is used to buy yCRV, a high-yielding basket of USD stablecoins, which is allocated to the Yam treasury which is controlled via community governance. Holders of any of eight eligible tokens, which included Compound and Maker, could stake them into Yam's front-end and start earning YAM.

Synthetix has reached the $1 billion in value locked milestone, following other DeFi protocols like Compound and Aave. Synthetix (SNX) has been one of the many DeFi tokens that has made substantial gains in 2020, having hit its all-time high of $7.32 on August 15 and rallied more than 400% year-to-date.

Decentralized finance (DeFi) is expanding into the world of interest rate swaps (IRS), a derivative instrument for exchanging fixed and variable interest rates, which account for more than $1 quadrillion in exchanged value per annum in traditional finance. DeFi firm Voltz Labs has launched a non-custodial automated market making (AMM) IRS trading platform based on the Aave and Compound DeFi USDT, USDC, DAI and ETH lending markets. However, IRS AMMs are challenged by DeFi markets' lack of fixed-rate products off which to price swaps. (Traditional markets offer both variable- and fixed-rate products.)