24th June 2022:
Aave: Deposited($ 48,856,199) Loaned($44,383,853)
Compound: Deposited($3,171,843,487) Loaned($ -218,554,207)
Maker: Deposited($2,984,853,487) Loaned($6,333,738,272)
I just looked at the charts on Dune.com and it shows a negative loan number for compound… Can anyone elaborate on this?
I think I need to rewatch this video.
July 1st 2022
LTV for June 30th 2022 as for July 1st 2022 at midnight there are no available values shown.
AAVE: 32%
COMPOUND: -11%
MAKER: 232%
AAVE and Compund both have DAI and MAKER in their options foor lending. This could possibly also influence MAKER. I guess it depends on what is going on in the background. for example what Tokens are borrowed and suppiled and what the makeup of the liquidity pool is.
use cases are durastically different between Maker, Aave and compound.
diving deeper, they’re apples, oranges, and bananas.
I wouldn’t put em all in one basket and compare just on their TVL due to their inherent differences.
keep in minnd compund is only on ethereum, same as Maker.
Aave is multichain.
MakerDAO has the largest TVL because there are a lot of dapps built on it.
Aave and Compound offer better lending rates and a wider range of tokens.
However Dai coin is very popular and used for a lot of protocols so MakerDAO is on the top for now.
MakerDAO has a higher LTV than the other two because it’s a second layer dapp on the Ethereum blockchain, however, it is limited it its functions.
AAVE and Compound both have better lending rates and more tokens available to borrow than MakerDAO.
As of 8/16/2022 LTV is 26% for AAVA, 222% for MakerDAO, and -11% for Compound.
At this moment the LVT according to dune.com is:
MakerDAO: 74%
AAVE: 44%
Compound: 40%
MakerDAO always has a higher LVT due to their stablecoin Dai, collateralized by many of the funds that enter the protocol and also because many dapps are built on top of it.
Aave and Compound have better lending rates, more tokens available and more functionalities (like now flash loans in Aave) than MakerDAO, that’s why they have a lower loan to value, therefore, it would be safer to lend there.
LTVs as of September 25th 2022:
The drivers behind these numbers as I understand it are several, and include:
However, there are several things I don’t fully grasp here:
@thecil It would be great if you could provide a full answer here 
MakerDAOs have a much higher LTV than the other two in order to have a well-secured DAI creation.
Aave, Compound offer more assets. Aave furthermore offers the possibility to swap the collateral of the loan. MakerDAO, on the other hand, has introduced the excellent novelty of an interest-free loan using staked ETH!
MakerDao offer lower yield as it has majority of the liquidity pools, also having its stablecoin DAI which Aave or Compound do not have. However it order to atract users to Aave or Compound those platforms may use higher yields in their liquidity pools or additional borrowings options that MakerDao.
First of all, according the data fetched on Duna analytics today (November 22nd, 2022) results are different to what is stated in the original question. Currently, the LTVs of AAVE, Maker and Compound according to this website are as follows: 331%, 61% and -21%. These results don’t make any sense, except Maker. These numbers would mean that AAVE has way more loans than collateral and in the case of Compound, borrowers are actually lenders. I believe there’s something wrong with the metrics. Therefore, for the purpose of this exercise, I will stick to the metrics post in the course.
Having said so, let’s analise the original data: Maker has the higher LTV, hence the higher risk, because this is the protocol that uses collateral to mint DAI, the stablecoin. There’s the risk only in one side of the equation: the collateral. On the other hand, AAVE and Compound which are lending/borrowing protocols, they don’t mint any token. The volatily are in both sides of the equation, therefore needs a lower LTV to asses the risk associated.
Because of the above, these lending/borrowing protocols benefit with higher returns to the lenders, whose benefits comes directly from the borrowers. The protocols only take away 10% of the earnings and distribute the rest to the lenders. On the other hand, when minting DAI, the 100% of the stability fee minters (equivalent to borrowers) goes to reinforce the protocol.
I had the same difficult time to understand such metrics. LTVs outside the range of 0-100% make no sense to me. In the first case (negative LTV) will mean that borrowers are actually lenders, and in the case of LTV > 100% means that the loans are not collaterized.
Compound is a protocol that allows users to earn interest on their cryptocurrency deposits (i.e. by lending their cryptocurrency to other users who want to borrow it) and also borrow cryptocurrency from the platform. It is built on the Ethereum blockchain and is primarily focused on providing liquidity for cryptocurrency markets.
MakerDAO, on the other hand, is a decentralized organization that operates on the Ethereum blockchain and is focused on providing stablecoins (i.e. cryptocurrencies that are pegged to the value of a traditional asset, such as the US dollar). MakerDAO’s flagship product is the Dai stablecoin, which is backed by Ethereum and other collateral.
Users can generate Dai by depositing collateral (e.g. Ethereum) into a smart contract called a “Collateralized Debt Position” (CDP) and borrowing against it. The amount of Dai that can be generated is limited by the value of the collateral and the “debt ceiling” of the CDP.
One reason why MakerDAO has a higher Loan-to-Value (LTV) ratio than Compound or Aave is because it uses a collateral-based model for lending, rather than a credit-based model. This means that the amount of Dai that can be borrowed is directly tied to the value of the collateral that is deposited into the CDP. The LTV ratio is the ratio of the value of the loan to the value of the collateral. Because the value of the collateral determines the amount of the loan in the MakerDAO system, the LTV ratio can be higher than in other lending platforms that use a credit-based model.
In terms of incentives, both Compound and Aave offer users the opportunity to earn interest on their deposits by providing liquidity to the platform. This can be a strong incentive for users to deposit more funds into these platforms. In addition, both platforms offer yield farming opportunities, which allow users to earn additional rewards by providing liquidity to certain pools or by staking their tokens.
MakerDAO, on the other hand, does not offer the same type of interest-earning opportunities for depositors. Instead, it relies on the stability and demand for the Dai stablecoin as an incentive for users to participate in the system. Users may be attracted to the stability of the Dai stablecoin and the potential for appreciation in its value as more people use it. In addition, the MakerDAO system includes a series of governance and stability mechanisms, such as the MakerDAO Stability Fee and the MakerDAO Governance Risk Team, which work to ensure the stability and sustainability of the system.
Very interesting analysis. Thanks for this breakdown.
Maker DAO - Collaterally backed stable coin with lots of Dapps. That gives higher LTV.
Compound and Aave has higher lending rates, offers flashloans and yieldfarming opportunity.
Aave and Compound have lower LTVs than Maker DAO because the incentivize users to deposits. Maker DAO does not offer higher interest rates on deposits, so users are not incentivized to desposit more funds. This is why Maker DAO has a much higher LTV than the other two.
Aave/Compound allows better user experience to access of interest rates, variety of tokens to borrow/lending and has a lower LTV risk compared to MakerDAO.
Aggregate last 12 months LTV
MakerDAO 114%
Compound -26%
AAVE -1%
MakerDAO prioritizes the issuance of DAI. Its higher LTV stems from DAI’s stability and the collateralization mechanism employed.
Aave offers a wider range of cryptocurrencies for borrowing and lending. To attract users, Aave implements liquidity mining programs, rewarding participants for providing liquidity to its pools. It also provides interest-earning opportunities to attract depositors.
Compound has an emphasis on security and stability that aligns with its target audience seeking a more conservative approach to lending. While Compound offers yield farming and governance token staking, its focus remains on providing a reliable and risk-averse lending platform.
Query engine is broken. Lessons need to be updated.