Crypto Loans Have Exploded in the Past Few Months

By Charlie Custer


Cryptocurrency-based loans have been available for several years now. But despite the advantages inherent in structuring automated loans with smart contracts, volumes have remained relatively low, at least until recently.


After a four month downward slump in volume finally ended in April of this year, crypto loan volumes have been growing for four months straight. Moreover, July’s volume has already more than doubled the previous all-time high for loan volume originated in a single month.


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In fact, according to LoanScan.io as of late July, crypto loan volumes over the past four months (roughly $257 million) have nearly eclipsed the total from the previous 16 months (roughly $284 million).


The crypto loan market is still relatively small. To date, the platforms LoanScan tracks have originated about $546 million in loans. Compare that to the traditional loan market: leveraged loan volume is at about $311 billion this year in the US alone. 


Still, the growth in the crypto loan market is clear. The question is: Why is this happening? As is evident in the chart above, this explosion is a reflection of the increased attention and new customer base brought onboard by new product launches for Dharma, Compound v2, and dYdx. (Note: dYdX offers other forms of trading beyond lending, but this article is focused specifically on its lending volume).


Dharma was the first of these new platforms to make an impact this April, when the company made its loan platform public. Compound v2 and dYdX made bigger splashes with their launches (in May and late April, respectively), and have also managed to maintain stronger numbers where Dharma has fizzled, posting month-over-month growth in June and July to date. Compound v2, in particular, has exploded this month, posting a volume gain of over 4X compared to June.


It remains to be seen whether Compound v2 and dYdX can maintain their impressive growth patterns. But they’re off to a strong start.


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