DeFi Boom: Chainlink’s CDY Index Reveals Surging Yields

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February 7, 2025 by Sadia Ali

DeFi yields surged in Q4 2024, with USDC and USDT supply yields averaging 8.37% and 7.13%, respectively.
The CDY Index helps compare DeFi lending yields with traditional markets like Treasury bonds.
DeFi protocols and token issuers can use the CDY Index to optimize market competitiveness.

The decentralized finance (DeFi) sector witnessed a significant uptick in activity during Q4 2024, with rising digital asset prices fueling borrowing and lending markets. As traders leveraged their assets, borrow utilization rates soared on platforms like Aave v3, often surpassing optimal levels.

This increased demand led to a sharp rise in stablecoin supply yields, as the Chainlink DeFi Yield (CDY) Index recorded an average USDC yield of 8.37% and USDT at 7.13%, nearly doubling from the previous quarter. The CDY Index aggregates data from top lending markets, providing a clear picture of yield trends across DeFi.

Notably, decentralized finance lending yields outperformed traditional Treasury bond yields, emphasizing the growing appeal of crypto-based financial products. Despite this, the nature of DeFi lending remains distinct, as yields fluctuate based on market activity rather than being fixed like Treasury bonds.

Asset Managers Gain Strategic Insights from CDY Index

With DeFi lending markets valued at an estimated $50-60 billion in value at the beginning of 2025, asset managers increasingly use information drawn from the CDY Index. Ethereum continues to dominate, with about 60% of its market under its grasp. Under bullish demand for lending, lending yields become a feasible source for yield-seeking investors for digital assets.

However, decentralized finance is a segmented marketplace, with yield variation between platforms including but not limited to, Aave, Compound, and Spark. CDY Index simplifies yield tracking, with asset managers in a position to effectively contrast yields with little to no searching involved. With a model backed in data, investors can make smart investments in a shifting marketplace with ease.

CDY Index Enhances DeFi Protocol Competitiveness

For DeFi protocols, competitive yields have to be sustained in a manner that attracts liquidity in. CDY Index enables platforms to set ideal yield settings, balancing competitiveness with not over-risks for users. By following real-time yield trends, protocols can dynamically adjust incentives in a manner that will maintain growth.

The report compared two nameless DeFi platforms offering lending in USDC. One, an older pioneer, maintained a ~10% level of supply, with a smaller but rising competitor offering ~15%. The latter saw a 190% Q4 expansion in its USDC value locked (TVL), with growing yields acting as a catalyst for use.

Stablecoin issuers profit in the same direction. USDC’s value in the marketplace rose from $35.6 billion to $43.9 billion during Q4, in proportion to its high-yielding lending yields. Meanwhile, less-yielding stablecoins saw little development in terms of adoption. As DeFi keeps growing, CDY Index is paramount for protocols and token issuers that seek to maximize yields and attract users.

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