The big milestone of $2 billion in total value locked has arrived for decentralized finance markets as the embryonic industry keeps growing. Ethereum is feeling the pressure though, and the network fees are reflecting this.
It came quicker than expected, but the DeFi markets have just reached the $2 billion mark in terms of TVL according to DeFi Pulse. In less than a month, the total amount of crypto collateral locked into DeFi smart contracts has doubled.

Aave (LEND) Lifting Off
Aave, the open-source, non-custodial protocol on Ethereum for decentralized lending and borrowing is today’s digital darling, as its native LEND token is on a moon shot. LEND has surged 30% over the past 24 hours, from around $0.145 to top out just below $0.19, its highest price since the January 2018 crypto bubble.
Undercollateralized lending on @AaveAave will both end well and blow your mind. Reputation/identity based finance has rightfully been a holy grail for some time, I think the design space is enormous here,When asked how this works, Aave replied that individual users will be able to delegate their credit lines to other trusted parties, with some ‘off/on-chain magic.’ It made the analogy of an ‘OTC lending desk powered by an underlying decentralized money market.’

With @AaveAave announcements today, it seems DeFi lending space is basically splitting into two schools: either risk / reward accrues to token holders ($MKR, $LEND, etc.) or to users themselves ($COMP, dYdX, etc.) who can vote with their feet.At the time of writing, the poll Schmidt added to the post showed 56% voting for token holder-based governance over 44% for users making the decisions.
A Big Week in DeFi
There have been some big developments in the DeFi space over the past week or so. Ethhub co-founder, Anthony Sassano [@sassal0x] delved into some of these advancements in his latest weekly industry update. In addition to developments at Aave, Kyber’s Katalyst officially launches today offering staking opportunities for KNC holders on the new KyberDAO. In its latest update, the Kyber Network stated that staking will begin today (July 7) marking the launch of ‘Epoch 0,’ while governance voting will start a week later with ‘Epoch 1.’ Rewards to voters will be distributed two weeks after that with the start of ‘Epoch 2.’ As a result, KNC has been on a wild ride recently, topping out at a two year high of $2 last week. Staking does wonders for FOMO on a crypto asset, as has been evidenced by the performance of Tezos this year.
Ethereum Network Woes
All of these events have been bullish for the nascent DeFi ecosystem, but it appears the foundations of this financial landscape are cracking under the pressure, despite many on-chain metrics improving. There has been an increased level of discontent in the crypto community about the risings costs on the Ethereum network. These high gas fees make the tiny operations with DeFi smart contracts impractical and financially unsustainable. Ethereum has yet again become a victim of its own success. Messari researcher, Ryan Watkins [@RyanWatkins_], pointed out that while there are some positives from high network fees, bad user experiences may deter the masses from getting into DeFi:It’s easy to highlight the positives of high transaction fees on Ethereum, like signaling strong demand for block space, and long-term sustainability of monetary policy. But in the short-run, high transaction fees on Ethereum create a terrible UX and need to be dealt with.

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