As the cryptoeconomy seems to be entering its next bullish cycle, the outstanding volume of crypto-collateralized loans backed by the four most popular DeFi lending projects topped the $100 million USD mark for the first time.

Those projects — MakerDAO, Dharma, Compound, and dYdX — are all lending plays in the Ethereum ecosystem designed in idiosyncratic ways to create automated self-loan processes.

Maker has proven to be the arena’s juggernaut to date with more than $432 million worth of ether (ETH) presently locked up in Maker CDPs, or collateralized debt posititions, in order to guarantee users’ Dai stablecoin loans. Once a CDP is paid down, its collateralized ether is unlocked and the loan’s associated Dai tokens are permanently burned — a dynamic that’s meant to keep the Dai’s peg at $1.

1/Looks like today is the first day when loans outstanding on open source #DeFi protocols topped $100 million ($100.3m as of now). Loans outstanding @MakerDAO = $85.4m, @Dharma_HQ = $8.3m, @compoundfinance = $5.5m and @dydxprotocol (not in the photo) = $1.1m. Charts @LoanScan_io pic.twitter.com/37ov863SvQ — Linen App (@getLinenApp) May 14, 2019

According to the Ethereum loan explorer site LoanScan, outstanding loans facilitated by Maker CDPs currently stands at $85.4 million. In a distant second and third comes Dharma and Compound, which are now facilitating $8.3 million and $5.5 million in loans respectively. Not shown on LoanScan is the upstart dYdX platform’s $1.1 million contribution.

Notably, the $100 million milestone in outstanding DeFi loan volume coincided with the total amount of value locked in DeFi projects — e.g bitcoin in the Lightning Network or ether in Maker CDPs — crossing the $500 million threshold for the first time as well.

500 MILLION DOLLARS IN DEFI!!! pic.twitter.com/JbMohVMQtX — scott lewis DEX.AG 🌾 (@scott_lew_is) May 14, 2019

The DeFi boon is unsurprisingly coming as crypto markets have turned bullish once more, with the bitcoin price having surged up to $8,000 and the ether price rising in kind to $220. Activity is up across the board, so to speak.

Furthermore, more users are leveraging DeFi lending platforms to “long” markets by using their loans to buy more crypto — a dynamic that’s contributed to the cryptoeconomy’s latest uptrend, even if just in part.

The grand questions for now pertain to whether 1) Maker can maintain its crypto lending dominance and 2) whether the current bullish market conditions can last and accordingly win over a new wave of lasting users for DeFi projects.

Maker Tries to Hold Its Ground

The Dai Stability Fee (DSF), the interest rate charged to CDP owners for their Dai loans, has surged almost 20 percent as MKR token holders have repeatedly voted to raise the rate since the start of the year.

Why? It’s been a concerted effort to return the Dai to its $1 USD peg, as the stablecoin’s price has traded below that price in recent weeks. The idea is that a higher interest rate will cause more CDP owners to close out their positions, thus burning Dai in a bid to bring the token back to $1.

The good news is that the Dai’s price has gotten much closer to its peg in recent days, though the rapid hiking of the DSF has been rather onerous on users who haven’t used their CDPs to long crypto but rather for regular purchases.

With the Dai’s interest rate now at 19.5 percent, it would have been more affordable — or in the least, more predictable — for users to have used credit cards instead. Indeed, the Dai rate is designed to fluctuate in line with changing circumstances, but with recent chatter forming in the U.S. around making interest rates higher than 15 percent illegal, the Maker community now finds itself in an interesting gray area.

Speaking of finds, earlier this month the MakerDAO Foundation revealed that the Maker voting contract software had a critical bug that could’ve led to permanent loss of user funds. The project’s since had an updated version of the contract audited to root out the flaw.

On the horizon, the Maker community has the imminent launch of the multi-collateral Dai (MCD) system to look forward to. MCD will allow users to stake assets beyond just ether in order to take out Dai loans.