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Compound’s ‘Yield Farmers’ Briefly Turned BAT Into DeFi’s Largest Coin

Paddy Baker
Updated ·2-min read

A digital advertising token briefly became bigger than ether in the decentralized finance (DeFi) space, all thanks to popular lending protocol Compound.

  • Basic Attention Token (BAT) – a token used to incentivize digital ad consumption on the Brave browser – was the most used coin in DeFi in Q2 2020.

  • BAT’s volumes in DeFi came to $931 million, over $300 million more than ether, according to a report Monday from Dapp.com.

  • Jon Jordan, director of communications at DappRadar, a data source on decentralized apps, told CoinDesk the token’s overnight popularity came from generating the best return on Compound, not because of any feature of BAT.

  • Data from DappRadar found more than $500 million worth of BAT was borrowed on Compound in June alone, enough to make it the most traded digital asset in the DeFi space across Q2 2020

  • Launched as recently as June 15, Compound quickly became one of the most popular DeFi platforms as it rewarded lending and borrowing activity with free COMP tokens, worth around $200 at press time.

  • “Yield farmers” – who maximize activity on Compound to receive as much free COMP as possible – could earn a high rate of interest from lending BAT, where annual percentage yield (APY) stood at 14%.

  • The next highest yield was 3.5% for the stablecoin tether (USDT).

  • Trading volumes for the interest-receiving proxy token, cBAT, were up to about $320 million in June.

  • When Compound modified its COMP reward system to disregard interest rates on Thursday – so markets with less borrowing demand suddenly had smaller allocations – the lender-heavy BAT market promptly subsided.

  • BAT's supply on Compound fell from $324 million to $155 million Thursday, and is now down to just $24 million as of Sunday.

  • BAT borrowing on the platform fell from $292 million to $126 million, and was just $2 million by Sunday.

  • Rock-bottom borrowing means BAT’s APY has now slumped to 0.17%, one of the lowest rates on Compound, which has taken out many of the lenders, too.

  • Only $67 million worth of BAT loans has been made on Compound in July.

  • Over the same timeframe, $478 million worth of dai loans have been made; its APY is currently 2.63%.

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