Compound Finance has expanded its asset offerings by adding two new tokens to its decentralized finance (DeFi) platform: Ethena’s stablecoin, USDe, and Mantle’s liquid staking token, mETH. This move follows a vote by Compound’s governance token holders on January 8, which approved the addition of both tokens as collateral options on the platform.
As one of the leading DeFi platforms, Compound currently holds over $2.7 billion in value locked, as reported by DefiLlama. The platform is also in discussions about incorporating cmETH, another token from Mantle, reflecting the growing popularity and adoption of liquid staking tokens (LSTs) within the DeFi space.
Liquid Staking Tokens Drive DeFi Growth
The inclusion of USDe and mETH on Compound signals the increasing influence of liquid staking tokens in DeFi. These tokens contribute to improved liquidity and yields, as they allow staked assets to participate in other protocols simultaneously, maximizing returns through a process known as restaking.
Since the beginning of 2024, the total value locked (TVL) across the DeFi ecosystem has surged by approximately 150%, reaching over $117 billion as of January 9. While still below the peak of $170 billion in 2021, the growth remains significant, with LSTs like mETH and cmETH playing a pivotal role in this rise.
USDe: A Rising Stablecoin
Alongside the growth of LSTs, stablecoins continue to gain traction in the market. Ethena’s USDe, launched in February 2024, has quickly become a prominent player, surpassing Dai to claim the position of the third-largest stablecoin by market cap, trailing only Tether’s USDT and USD Coin (USDC).
USDe has attracted significant interest due to its appealing yields. Staked holders of sUSDe (staked USDe) have enjoyed annual percentage yields (APYs) averaging 17.5% since its launch. Currently, the yield stands at around 11.25% annually, further enhancing the token’s appeal in the competitive DeFi landscape.
In conclusion, the integration of USDe and mETH underscores the growing importance of liquid staking tokens and stablecoins in shaping the future of decentralized finance, while also highlighting the expanding role of Compound Finance in this evolving space.
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