• Ethereum co-founder Vitalik Buterin said that high-interest rates on DeFi protocols come with unstated risk. 
  • Buterin had earlier warned about the dangers associated with DeFi, noting that protocols have a non-zero chance of failure. 
  • Compound recently overtook MakerDAO to become the leading DeFi in the space.

The co-founder of Ethereum, Vitalik Buterin, recently said that interest rates on DeFi protocols that are prominently higher than those in traditional markets come with unstated risks. Buterin took to Twitter to discuss the high yields and interest rates associated with DeFi protocols. 

Buterin highlighted that higher interest rates on DeFi protocols are “inherently either temporary arbitrage opportunities” or come with unstated risks attached. At Tel Aviv’s Ethereal conference last year, Buterin had warned about the dangers associated with DeFi, noting that protocols have a non-zero chance of failure. 

According to DeFi Rate, the lending interest rates on the Nuo protocol for USDC have a 30-day average percentage of 10.25. Aave, a popular protocol, averages 4.28% for USDC lending while Compound offers 4.12% on its USDC deposits. On the other hand, legacy financial institutions offer much lower interest rates. Meanwhile, research by Money Rates revealed that Marcus (a borrowing instrument by Goldman Sachs) offers a 2.15% average annual percentage yield on its 5-year deposits as of the first quarter of 2020. 

Compound overtakes MakerDAO

The biggest news in the DeFi space is the fact that Compound (COMP) has overtaken MakerDAO to become the largest DeFi project. This has already been covered by FXStreet, which you can read here.

Robert Leshner, CEO and Founder of Compound, has recently tweeted a series of tweets explaining why this sudden rise of Compound is anything but an “overnight success story.”

 

(Excerpt) Read more Here | 2020-06-22 17:00:00
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