Analyzing the activity on lending platforms can sometimes be used as a barometer for measuring the sentiment of the cryptocurrency market as a higher number of collateral-backed loans may signal that traders are eager to trade a rising market.
The month of April saw the total value locked on Maker (MKR), Aave (AAVE) and Compound (COMP) climb to new highs alongside rising token values and trading volumes.
MKR/USDT vs AAVE/USDT vs COMP/USDT 4-hour chart. Source: TradingView
All three of the projects are based on the Ethereum (ETH) network and have benefited from the rising price of ETH as well as a recent decline in the average gas fee that has led to an uptick in user engagement with decentralized finance (DeFi).
Maker has seen the largest price appreciation in the month of April thanks to multiple factors including an upgrade to its liquidation engine and the possible expansion of its approved collateral list.
The Maker protocol is responsible for the creation of the