The boom of the cryptocurrency space has continued to allow the flourish of several other Blockchain technologies in the space, as the demand for innovative products and services continues to be at a high. However, the observance of many analysts recently is that Crypto Staking and Lending Protocols are beginning to thrive in the space. The most reasonable reason behind these protocols’ growth is that many investors are beginning to flock around them. However, what has come as a shock to many in the crypto space is that institutional investors are now patronizing these platforms.
Institutional investors are likely attracted to the yields
The typical modus operandi of staking and lending Protocols is that they always attract their clients with variant form yields. However, many analysts are divided on why the Protocols now seem to be so attractive for institutional investors. Many analysts believe that the Volatility of many crypto assets, which doesn’t seem to slow down, gives institutional investors headache, as the market is becoming too complex. An example of such an asset is Bitcoin, currently trading around $59,123 and has not been able to form a threshold around the $60K mark it hit two weeks ago.
These analysts believe this is one reason why the institutional investors are flocking to the Staking and Lending Protocols, which are known to offer yields better than even the digital asset traded. Many Staking protocols revolve around collecting investors’ digital assets and working with them in their networks. The investors who stake their digital assets in these staking networks will now start to receive incentives on every validated transaction on the network. The rewards are primarily in the form of the tokens invested in the network.
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Interest in these Protocols unlikely to slow down
While both Lending and Staking Protocols’ operation model seems to be focused on rewarding customers with yields, Lending seems to take a slightly different turn. Lending Protocols allow investors earn interest by lending their invested crypto assets to other users. The invested digital assets in Lending Protocols are mainly used to help the Protocol conduct and facilitate their business. The protocols create a mutual pool where investors can all donate their assets while at the same time deciding an interest rate in the pool.
The interest returns offered by many DeFi lending platforms can go as high as 30% annually. However, according to statistics, DeFi Lending Protocols like Aave, Maker, and Compound is worth more than $18 billion in crypto assets. On the other hand, Staking protocols like Avalanche, Cardano, and Co are reportedly worth about $100 billion, according to recent statistics by DewData. However, these statistics show that there is a general belief amongst many investors in these platforms, and interest will likely continue to be on a high.