Recent news reports WinterMute's investment in Euler Finance, contributing to the revival of $EUL after a previous downturn. This article provides an overview of the current leading lending protocols in DeFi.
Overview of Protocols in the Industry
Currently, there are several key lending protocols in DeFi:
- **AAVE**: The largest DeFi lending protocol utilizing a monolithic model, supporting multiple assets, and offering features such as Flash Loans and Isolated Mode. TVL exceeds $17.8 billion.
- **Compound**: An established lending protocol transitioning to an Isolated Model with Compound v3, focused on security and decentralized governance. TVL is over $2.1 billion.
- **Morpho**: A modular lending protocol operating under the Isolated Model, optimizing yield through individual pools. TVL is approximately $2.56 billion.
- **EUL**: A modular lending protocol that combines the advantages of both Monolithic and Isolated models, aiming to become the primary liquidity layer for DeFi. TVL is $680 million, which has significantly increased since December 2024, surpassing its all-time high.
Capital Efficiency
Capital efficiency of various protocols:
- **AAVE**: High capital efficiency due to pooled collateral, but reduced by rigid requirements and high liquidation penalties. Capital utilization ratio: approximately 56.97%.
- **Compound**: Lower capital efficiency due to the isolated model fragmenting liquidity. Capital utilization ratio: approximately 37.72%.
- **Morpho**: Improves capital efficiency compared to Compound, but is still constrained by the isolated model. Capital utilization ratio: approximately 66.56%.
- **EUL**: Superior capital efficiency due to the ability to connect vaults, reducing liquidity fragmentation. Capital utilization ratio: reaching 85.40%.
Personal Conclusion
WinterMute's investment in Euler Finance and the update v2 with advanced liquidation mechanisms have significantly boosted TVL and capital efficiency. While user numbers on Euler are increasing rapidly, it remains smaller than older protocols like Aave and Compound. With support from WinterMute, Euler may soon become a significant player in the lending space.
In conclusion, the recent changes in Euler Finance have led to significant improvements in its position in the DeFi segment, indicating its potential for future success.
