Gnosis Chain, a layer-2 solution for Ethereum that aims to provide fast, cheap, and secure transactions, has witnessed a remarkable growth in its total value locked (TVL) in the past month. According to DeFiLlama, a website that tracks the TVL of various decentralized finance (DeFi) protocols, the TVL on Gnosis Chain has increased by about 92% since the beginning of October 2023, reaching over $150 million as of Octiber 20, 2023.
sDAI as the catalyst for growth
One of the main drivers of this impressive growth is the launch of sDAI, a synthetic version of the DAI stablecoin, on Gnosis Chain. sDAI was introduced on Oct. 1, 2023, as a result of a collaboration between Gnosis Chain and Spark Protocol, a DeFi platform that offers yield optimization and aggregation services. sDAI allows users to earn interest on their DAI holdings by depositing them into the MakerDAO DAI Savings Rate (DSR) contract, which currently offers a 5% annual percentage rate (APR). Users can also use sDAI in other DeFi applications on Gnosis Chain, such as lending, borrowing, swapping, and farming.
$50 million in assets locked
According to DeFiLlama, sDAI has attracted nearly $50 million in assets locked as of Oct. 20, 2023, accounting for about one-third of the total TVL on Gnosis Chain. Moreover, sDAI offers a higher yield than DAI itself, as it leverages the difference between the amount of sDAI minted on Gnosis Chain and the amount of sDAI held by the bridge on Ethereum. The current sDAI Vault Annual Percentage Yield (APY) is 7.835%, which is higher than the DSR APR of 5%. This means that users can earn more interest by using sDAI than by using DAI directly.
More utility for users
The launch of sDAI on Gnosis Chain is a significant milestone for the DeFi ecosystem, as it bridges the interest rates between Ethereum and Gnosis Chain, and creates more opportunities for users to optimize their returns and participate in various DeFi activities. sDAI is also a testament to the innovation and collaboration that are driving the DeFi sector forward.
As Gnosis Chain’s CEO Martin Köppelmann said:
“We are thrilled to partner with Spark Protocol to bring sDAI to Gnosis Chain. This is a win-win situation for both platforms and for the DeFi community at large. By offering users a way to earn interest on their DAI holdings and use them in DeFi applications on Gnosis Chain, we are creating more value and utility for both chains.”