USDa, a Bitcoin-collateralized stablecoin, has emerged as the second-largest collateralized debt position (CDP) project in the world, boasting a total market size of $84.10 million, according to Avalon Labs.
This total includes $68.10 million in supplied assets and $20.85 million in borrowed assets. Launched on November 11, USDa is the first overcollateralized stablecoin pegged to Bitcoin, utilizing LayerZero’s cross-chain technology. Dubbed “Bitcoin Money,” USDa bridges decentralized finance (DeFi) and centralized finance (CeFi), offering liquidity in both permissioned and permissionless environments.
USDa’s reach spans major blockchain ecosystems, including BNB Chain, Ethereum, and Taiko, with a total value locked (TVL) of $483 million and a 30-day growth of 0.65%. It maintains $63.25 million in liquidity, an average borrow APY of 1.37%, and supports a robust liquidity rewards system, including an 8% fixed borrow rate for BTC-backed loans. USDa’s TVL across all platforms exceeds $700 million, signaling its potential as a strong contender in the CDP and DeFi lending markets.
Despite USDa’s growth, MakerDAO, the leading CDP project, continues to dominate with a $4.576 billion market cap and over 4.576 billion DAI in circulation. MakerDAO, which relies on Ethereum-based collateral, is firmly established in the DeFi landscape. By comparison, USDa’s market cap is $235.74 million, with a circulating supply of 235.5 million, according to DeFiLlama.
The Growing DeFi Lending Sector
DeFi lending operates as an on-chain alternative to traditional banking, allowing users to borrow and lend assets using digital collateral. Unlike traditional finance, DeFi lending operates independently of existing economic infrastructure.
The DeFi lending market, valued at $13.61 billion in 2022, has approximately $25 billion in outstanding debt, according to the Bank of International Settlements. The sector is projected to grow rapidly, with the global stablecoin DeFi market expected to achieve a compound annual growth rate (CAGR) of 46% over the next six years.
USDa’s innovative use of Bitcoin collateral and cross-chain technology positions it as a formidable player in this expanding market, though MakerDAO’s established dominance continues to set the benchmark for the CDP space.
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