Data shows extreme crisis in the Defi lending market: 71 percent of the value locked in disappears in just 12 months

By: Mark Jessy

Data shows extreme crisis in the Defi lending market: 71 percent of the value locked in disappears in just 12 months

January 18, 2023 2:59 AM

The idea of decentralized finance (defi) is becoming more and more important in the cryptocurrency economy. This is because the ecosystem provides a way to exchange digital assets, lend cryptocurrencies, issue stablecoins, and make money from arbitrage that doesn't involve a third party. 

Over the past year, there has been a lot of change in the defi lending market. Protocols like Terra's Anchor Protocol have been deprecated, and 71.95% of the value locked in defi lending protocols has been lost.

The defi protocol Aave held the most value locked (TVL), at $12.87 billion, among the decentralized finance lending protocols one year ago at this moment. According to data gathered by on January 10 of 2022, Aave's TVL of $12.87 billion was more than the TVL of the top five defi lending procedures on January 17 of 2023.


Here are the top five lending protocols as of January 10, 2022, based on the total value of loans that have been secured.

In the middle of January 2023, the top five defi protocols by market cap are Aave ($4.58 billion), Justlend ($3.02 billion), Compound ($1.85 billion), Venus ($813.63 million), and Morpho ($221.59 million). There is currently a total TVL of about $10.49 billion across all five of these defi protocols according to recent data.


The top five lending protocols in terms of total value locked on January 17, 2023.

Valued at about $8.5 billion on January 10, 2022, Terra's Anchor Protocol is now worthless. Terrausd (UST) holders put UST at anchor in exchange for a 20% annual percentage rate return that compounded daily.

Although Anchor had roughly $2,000,000 in UST prior to its depeg in May 2022, it now only has about $200,000 in its holdings. In terms of defi lending processes, Compound owned the third-largest TVL, totaling $8.09 billion. TVL for Compound fell to $1.85 billion as of January 17, 2023.

Justlend now has $3.03 billion in loans, making it the second largest defi lending protocol in use. Justlend, a decentralized lending platform built on Tron, increased its market cap from $1.72 billion to $3 billion, vaulting it from seventh place among defi lending protocols to second. Justlend has been one of the few decentralized finance lending applications to grow over the past year.

Abracadabra and Cream Finance, the fourth and fifth largest defi lenders in 2017, dropped out of the top five and were replaced by Venus and Morpho, respectively. Cream Finance has fallen from the tenth spot, when its market cap was $2.14 billion, to the twenty-first spot, when its market cap is $42.94 million.