- The collapse of a string of high-profile crypto lenders, exchanges and hedge funds has seen the value of treasuries managed by top DeFi protocols start to dwindle.
- Aave, one of the biggest DeFi lending projects, is seeking US$16.28 million from the so-called decentralized autonomous organization (DAO) that governs it to pay developers.
With the world scrambling for dollars, it would be strange if even the most well-funded decentralized finance or DeFi protocols weren’t.
With the crypto rout wiping out over US$2 trillion worth of market cap from the nascent digital assets, some of the largest DeFi protocols are still reeling from the crash of a string of lenders and brokers.
Attracting billions of dollars in investments, DeFi was intended to birth a new financial system that disintermediated brokerages, banks and other middlemen.
But the collapse of a string of high-profile crypto lenders, exchanges and hedge funds has seen the value of treasuries managed by top DeFi protocols start to dwindle, according to blockchain analytics provider Nansen.ai
Aave, one of the biggest DeFi lending projects, is seeking US$16.28 million from the so-called decentralized autonomous organization (DAO) that governs it to pay developers, the first time the development team ever asked for money from the Aave DAO.
In the request, Aave said costs associated with development have risen substantially and “building an innovative, secure and battle-tested version of a protocol such as Aave V3 requires experienced builders across a variety of skill sets that are fairly compensated for their work.”
Lido DAO, which manages Lido Finance, one of the biggest projects by total value of cryptocurrencies locked on the platform, is also seeking to weather DeFi’s ongoing liquidity crunch with the value of its liquid assets falling to around US$344 million from about US$800 million earlier this year.
Recently, Lido approved a proposal to sell 10 million of its native token to the venture capital firm Dragonfly Capital to raise cash.
Uniswap, one of the most popular decentralized exchanges, also saw the value of its DAO treasury drop to about US$1.7 billion, from a high of US$2.5 billion just five months ago.
Some industry observers said it isn’t surprising that some of the biggest DeFi projects are struggling with money.
While a lot of DeFi founders are more technical and extremely book smart, when it comes to finance, they are not experienced asset managers and the recent crypto winter would have caught many of guard.
