Compound's 'Yield Farmers' Briefly Turned BAT Into DeFi's Largest Coin

The digital advertising token briefly became bigger than ether in the decentralized finance space, thanks to popular lending protocol Compound.

Jul 6, 2020 at 2:00 p.m. UTC
Updated Sep 14, 2021 at 8:59 a.m. UTC

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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