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Stablecoins and liquid staking tokens are continuing to drive TVL growth across DeFi.
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Compound Finance is adding Ethena’s stablecoin and Mantle’s liquid staking token (LST) to its decentralized lending and borrowing platform, Mantle told Cointelegraph.
On Jan. 8, Compound’s tokenholders voted to add stablecoin USDe and mETH, Mantle’s LST, to the decentralized finance (DeFi) protocol as lending collateral.
The integration is the latest example of accelerating adoption of Ethena’s popular yield-bearing stablecoin and Ether (ETH) LSTs.
Compound is among the Ethereum network’s most popular DeFi lending protocols, with upward of $2.7 billion in total value locked (TVL), according to DefiLlama.
“Discussions are underway to introduce and integrate cmETH” on Compound, Mantle said in a statement, referring to the DeFi protocol’s liquid restaking token (LRTs).
Compound Finance’s TVL. Source: DefiLlama
DeFi TVL growth
DeFi TVL is approaching highs not seen since 2021, driven partly by the adoption of LSTs and LRTs, such as mETH and cmETH, according to DefiLlama.
As of Jan. 9, aggregate DeFi TVL stands at upward of $117 billion, marking a nearly 150% increase year-to-date, according to DefiLlama. It still lags 2021’s highs of $170 billion, the data shows.
Restaking involves taking a token that has already been staked — posted as collateral with a validator in exchange for rewards — and using it to secure other protocols simultaneously.
As of Jan. 9, Mantle’s mETH generated a 2.86% annual yield on staked ETH. Its cmETH token further enhances yields with restaking rewards.
Total DeFi TVL. Source: DefiLlama
Stablecoin adoption
Stablecoin market capitalizations increased sharply after US President-elect Donald Trump’s Nov. 5 election win. Trump has promised to make America “the world’s crypto capital.”
Since November, the combined market capitalizations of the top three stablecoins — Tether’s USDt USDT, USDC USDC, and Dai DAI — collectively grew by more than $25 billion, according to investment bank Citi.
In December, Ethena’s USDe surpassed Sky’s (formerly Maker) Dai in total market capitalization, becoming the third-largest stablecoin after USDT and USDC.
Launched in February, USDe bootstrapped billions of dollars from stablecoin holders pursuing double-digit APRs.
“Since February 2024, sUSDe holders have enjoyed an average APY of 17.5%, peaking at 55.9% (March 7, 2024) and bottoming at 4.3% (August 8, 2024),” cryptocurrency researcher Messari said in a December note.
As of Jan. 9, staked USDe, or sUSDe, is yielding approximately 11.25% annual percentage returns, according to DefiLlama.
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This article first appeared at Cointelegraph.com News
