  We provide an overview of decentralized protocols like Compound and Aave that
offer collateralized loans for cryptoasset investors. Compound and Aave are two
of the most important application in the decentralized finance (DeFi)
ecosystem. Using publicly available information on rates, supply and borrow
activity, and accounts we analyze different elements of the protocols. In
particular, we estimate ex-post margins that give a comprehensive account of
the cost of financial intermediation. We find that ex-post margins considering
all markets are 1% and lower for stablecoin markets. In addition, we estimate
quarterly indicators regarding solvency, asset quality, earnings and market
risk similar to the ones used in traditional banking. This provides a first
look at the use of these metrics and a comparison between the similarities and
challenges to our understanding of financial intermediation in these protocols
based on tools used for traditional banking.
