Total Debt

Overview

The Total Debt is a dynamic indicator that fluctuates with borrower activity, including new loans being taken out and existing loans being repaid. It includes:

• Current Outstanding Loans: The total value of all active loans that have yet to be repaid.

• Historical Borrowing Activity: While primarily concerned with current outstanding amounts, trends in this indicator can also reflect historical borrowing activity and demand patterns over time.

How can I use it?

This indicator directly measures the demand for borrowing within the protocol. A high total borrowed amount suggests strong user engagement and a need for the capital offered by the protocol, indicating its relevance and utility in the market.

In addition, the total borrowed amount influences the interest rates in the protocol through supply and demand mechanics. Higher borrowing demand can lead to higher interest rates, which can attract more lenders to the platform, balancing the supply with the demand.

Finally, the borrowing activity within a DeFi lending protocol can provide broader economic insights, such as the prevailing sentiment among crypto investors, trends in leverage use, and the overall health of the crypto market.