Recent on-chain data analysis reveals that traditional banks generate ten times more profit per dollar than decentralized finance (DeFi) lending protocols like Aave. The majority of DeFi lending revenue is derived from strategies involving volatile collateral and stable debt. Aave, a leading DeFi platform, has amassed over $20 billion in total loans, primarily utilized for yield farming and leveraged positions.
The analysis highlights significant structural differences in profit margins between banks and DeFi platforms. As DeFi continues to expand into real-world assets, there is potential for these platforms to decouple from traditional crypto cycles and enhance their returns, potentially narrowing the profitability gap with banks.
Banks Outperform DeFi Lending Protocols by 10x in Profitability
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