The yield farming frenzy has put over USD 3.4billion into DeFi liquidity pools

September 23, 2020
By Benson Toti

Over $1.38 billion is locked in four liquidity pools on Uniswap

Investors have locked more than $3.4 billion in decentralized finance (DeFi) as the frenzy about yield farming gathers even more steam after decentralized automated market maker (AMM) Uniswap launched its UNI token.

A recent survey by cryptocurrency data provider CoinGecko showed that nearly 81% of crypto holders know of yield farming, with the niche sector increasingly popular among investors seeking a return on their digital asset holdings by providing liquidity.

According to the survey results, 93% of yield farmers report upsides of 500% in ROI, with most of the LPs providing an annual percentage yield (APY) of more than 1000%.

And that should partly explain the rush to lock more funds in DeFi protocols, despite the huge fees due to congestion on the Ethereum network and the risk of suffering impermanent losses on most of the AMMs.

Over $1.3 billion locked in Uniswap

The DeFi sector as a whole has over $8.3 billion in total value locked. Although this value has declined from highs of $13.2 billion recorded earlier this month, it is still way higher compared to the start of the year.

According to data from CoinMarketCap, more than $3.4 billion of the total value locked in DeFi protocols is in liquidity mining pools. Of this amount, $1.38 billion is locked in pools on the Ethereum-based trading platform Uniswap. Overall, Uniswap leads the DeFi market in terms of TVL (USD) by commanding 23% of the share at $1.99 billion.

And more and more farmers are looking to benefit from up to 0.12% rate of return per day. As can be seen below, the 7-day moving average for trading volume on Uniswap is $3.1 billion, up over 13.6% week-on-week.

Curve Finance accounts for the second-largest TVL in yield farming protocols with over $634 million locked in six pools, including in renBTC and Compound. Sushiswap is third with over $455 million in 17 pools, while yearn.finance ranks fourth with over $366 million locked in six liquidity pools.

Newly launched Bakeryswap- which is built on the Binance Smart Chain- has over $9 million in total value locked.

The exponential growth in yield farming and the larger DeFi space has a growing number of crypto commentators looking at it as likely to surpass the ICO boom during the 2017 crypto bull market.