Here Are the Top 5 Borrow/Lending Protocols that you Need to Know of
As the DeFi market has continued to evolve and grow over the course of the last year or so, one domain that has made an insane amount of progress is that of decentralized borrowing/lending. In this regard, it should be highlighted that decentralized lending platforms are basically financial ecosystems that enable anyone, anywhere across the globe to share and borrow funds without the need of a centralized intermediary such as a bank. Additionally, these platforms also offer a much higher degree of security all while operating within a trustless environment — i.e. there is no single point of failure within the ecosystem.
In other words, DeFi lending/borrowing platforms allow users to issue loans and even deposit fiat in lieu of a steady rate of interest which is doled out in a completely decentralized manner. This is an extremely lucrative setup for lenders as it enables them to accrue steady interest on their existing holdings in a highly risk-free manner, that too without them having to supply their personal data information into the hands of any 3rd party service operators. That said, in this article, we will look to list out some of the most prominent DeFi lending solutions available in the market today, so without any further ado, let’s get straight into it.
One of the most promising, fastest-growing BSC-based DeFi projects in the market today, Growth DeFi’s MOR cryptocurrency provides a unique take on how users can borrow/lend funds in a decentralized fashion — quite akin to the way in which MakerDAO and DAI function. However, what truly sets the platform apart from the rest of the fray is that it incorporates a host of other novel tools that are totally unique to the Growth DeFi ecosystem. For example, it provides users the ability to mint/borrow MOR stablecoins with collateral — which in turn, also can be used to help users draw an additional passive yield. MOR started from a simple question: How can they bring higher returns for yield farmers, while still keeping risk to a minimum?
As a result of such a unique setup, it is possible for investors to not have to simply watch their capital lie idle when they acquire a loan. For example, users can deploy their borrowed funds to leverage their farming positions, which is an extremely lucrative prospect since it stands to really maximize one’s monthly yields in a big way. To put it another way, MOR helps provide users with the best of what the DeFi world has to offer, allowing them to not only earn while borrowing but also increase their overall monetary leverage, both in relation to their yield-earning and non-yield-earning positions — all while being exposed to extremely low, fixed borrowing rates. They recently introduced their MOR self-repaying Loans, a first for efficient leveraging. The result is a combination of yield going up and debt (and risk) going down. Self-Repaying Loans will be available for all collaterals on Avalanche very soon.
In its most basic sense, Aave can be described as a decentralized, non-custodial liquidity platform, that allows depositors to supply liquidity into the platform’s native fund pool, allowing them to earn passive income in a highly streamlined manner. On the other hand, the platform provides borrowers with the ability to gather funds in an over collateralized or undercollateralized manner, as per their needs and requirements.
Furthermore, it should be noted that by depositing assets, consumers are afforded the chance to deploy their deposited assets as collateral. To be more specific, any interest accrued can be used to offset the rate that an individual may have accumulated as a result of their borrowing efforts.
Alpaca is one of the world’s first leveraged yield farming protocols to have been devised atop the Binance Smart Chain (BSC), allowing users to mitigate many of the high-fee, low transaction throughput issues that they are routinely faced with as a result of operating on the Ethereum blockchain. In terms of participation, Alpaca allows users to operate in the capacity of a lender, yield farmer, bounty hunter, and liquidator.
To further elaborate on this setup, Alpaca Finance allows users to accrue steady income on their base assets that have been deposited by them into the company’s vault system. These stored assets are then offered to yield farmers, allowing them to leverage up their existing positions.
One of the oldest and most prominent DeFi platforms in the market today, MakerDAO is best described as an unbiased global financial system that seeks to help make asset lending and borrowing extremely streamlined and hassle-free for people all over the globe, especially those individuals lacking access to any kind of banking services or infrastructure.
On a more technical note, it should be highlighted that MakerDAO has been built atop the Ethereum ecosystem, the core operational protocol that issues the Dai stablecoin — a stablecoin that has its value soft-pegged to the US Dollar.
Furthermore, DAI also helps in the facilitation of collateral-backed loans without the need for a central financial authority. As a result of such a setup, borrowers can raise capital at rates that are extremely low when compared to most banking institutions while lenders can accrue high-interest ratios ranging from anywhere between 8% – 15%+. To put things into perspective, most savings bank accounts in America and Europe only provide users with a recurring interest rate of around 0.2% – 0.6%.
Simply put, one can think of Rabbit as being a novel borrowing/lending protocol that allows individuals to make use of a number of highly advanced DeFi modules such as leveraged yield farming. The platform has been built atop the Binance Smart Chain (BSC) and is designed to allow users to participate in liquidity farming via routes like over-lending, leverage manipulation — thereby maximizing their passive income streams.
One of the most appealing facets of this platform is that it allows users with limited funds to participate in liquidity farming. In this regard, it should be noted that the platform allows users to gain access to 10X leverage, thus allowing them to maximize their revenue per unit time. Not only that, it also provides users with a borrowing pool that is designed for those with a low-risk appetite or those individuals who may be looking to earn steady, albeit smaller passive income streams on their holdings. Lastly, it should also be pointed out that Rabbit is backed by a number of prominent firms operating within this space including FBG Capital, Horizon Capital, PCoin Labs, Redline Capital, AngelONE Capital, Bibox, amongst others.Source