The first DeFi lending platform AlgoFi on Algorand has launched with a TVL of nearly 30 million dollars.

The Algorand ecosystem has reached an important milestone. A new DeFi lending platform officially launched on the Mainnet at 1 AM on December 18, becoming the first money market and algorithmic stablecoin protocol in the ecosystem. This platform, named AlgoFi, has developed rapidly since its inception, with a total lock-up position (TVL) approaching 30 million USD.

Shortly after launching on the platform, AlgoFi announced a collaboration with the Algorand Foundation, planning to launch a $3 million liquidity mining program in the first quarter of 2022. This will undoubtedly further stimulate the platform's growth and user engagement.

The launch of AlgoFi adopted the Guarded Launch framework, aiming to comprehensively reduce risks. Nevertheless, the platform's liquidity cap was quickly reached. The development team plans to fully open the protocol to the public in the new year. As a pioneer in the Algorand ecosystem, AlgoFi offers generous rewards, which is a significant move for an early-stage ecosystem.

It is worth noting that behind these innovations is the support of the Algorand Foundation's $300 million Viridis Fund. Launched in September of this year, the fund focuses on the development of the DeFi sector. Currently, the fund has entered its second phase, named "Aeneas", which focuses on the three pillars of DeFi: cross-chain bridges, automated market makers (AMM), and capital market protocols.

Historical experience shows that the initial few projects of an ecosystem are often crucial. They often trigger a chain reaction, ultimately leading to a total Lock-up Position value reaching billions of dollars. The growth pattern of TVL can be a slow accumulation or a sudden explosion. As demonstrated by the launch of the first liquidity market BENQI on Avalanche earlier this year, the launch of money markets is usually one of the most important catalysts for emerging DeFi ecosystems.

Once an effective leverage (lending) market is established, new opportunities will arise. In the DeFi market, risk-tolerant investors need to leverage in order to execute their investment strategies. These investors typically seek high returns and are willing to take on high risks; their strategies are complex but also carry significant risk. For example, they might use one token as collateral to borrow another token, and then invest in liquidity mining to achieve high yields. Once new opportunities emerge, they will continue to borrow and invest in new liquidity mining projects. However, this strategy also faces the risk of sudden market crashes, which could lead to the liquidation of a large amount of collateral.

Algorand's uniqueness lies in its ability to attract the attention of both cryptocurrency speculators and traditional financial institutions. Unlike other Layer 1 blockchains, Algorand has a distinct advantage in the integration of DeFi and traditional finance, mainly due to its technology that enables true scalability without sacrificing decentralization.

However, venture capitalists remain a key factor driving the development of the ecosystem. They are the unsung heroes of any ecosystem, and their participation can actively promote the increase of Algorand's total Lock-up Position value. They identify system vulnerabilities and conduct stress tests. It is through their countless failures and attempts that Algorand's DeFi ecosystem has been able to grow to a large enough scale to attract the inflow of traditional capital. Once traditional capital enters, it may create an unstoppable development momentum. But before that, it is still the cryptocurrency native community that determines whether Algorand will succeed.

During this process, the AlgoFi team is playing a leading role. They are active builders, and before entering the cryptocurrency industry, the founders of AlgoFi were engaged in interest rate trading at financial institutions. This background enables them to combine traditional financial expertise with DeFi innovation, dedicated to bridging the gap between the two fields.