The decentralized financial system (DeFi) is starting to become more popular in the blockchain space mainly due to the rise of stable coins. Derivatives and the use of smart contracts are becoming a popular topic in the crypto space.
DeFi is something that anyone interested in cryptocurrencies should know about. That’s why we have decided to put together this guide on top DeFi lending platforms.
What is DeFi?
Decentralized finance (DeFi) refers to the technology that allows for p2p loans, financial derivatives and other types of short term credit to be issued by parties who have no formal relationship with a traditional financial institution.
Blockchain-based lending (DeFi) platforms are based on open source code and harness smart contracts to facilitate loans. DeFi apps can be used to get financing for just about anything including education, business startup capital, real estate development, and more.
Top DeFi Lending Platforms
MakerDAO, one of the first decentralized lending platforms on Ethereum, with a good track record for repayment since January, and has seen a surge of new loans in the last few weeks.
It has a decentralized network that offers competitive interest rates and an impressive stable coin called DAI.
MakerDAO exists within the Ethereum blockchain as a smart contract. It is an open-source system of governance that issues one single type of cryptocurrency, and anyone can join and contribute to the MakerDAO system.
Uniswap is a decentralized token exchange built on Ethereum. It was designed to bring together borrowers and lenders, in the same way that exchanges bring together buyers and sellers of stocks, bonds, foreign exchange and other financial instruments.
The project features a non-custodial design that facilitates trustless trading on the Ethereum blockchain. Its interface is similar to EtherDelta – because it’s using the same smart contracts called exchange smart contracts and factory smart contracts. The smart contracts are used for trades, while the factory contracts are used to add new tokens.
Aave is another great decentralized peer-to-peer lending platform and is changing the way borrowers and lenders interact with each other. Aave’s mission is to revolutionize the way people use credit so that it works for everyone.
The Aave protocol provides fidelity bonds to protect against default risk that is typically faced by lenders (e.g. unpaid loans or platforms going bankrupt). These fidelity bonds are paid in the form of Aave tokens, dramatically improving the cost structure of lending for the ecosystem.
Curve Finance is a platform for peer-to-peer lending, which allows investors to lend directly to businesses and grow their portfolios.
Curve is the world’s first day-one decentralized finance app built on Ethereum. It uses smart contracts to connect investors, traders, and borrowers transparently and efficiently.
Curve makes it simple to borrow and invest like the big guys—with complete transparency, no hidden fees.
As the crypto market sees new lows, the bearish sentiment penetrates the community and you start to hear ‘doom and gloom’ everywhere.
There are still a few investors that believe this is going to be a big year for crypto. Many will be looking into getting exposure to various assets through alternative methods, such as borrowing through a decentralized lending platform (or DeFi).
Despite the uncertainty, DeFi platforms continue to impress more users, which says a lot about what’s to become of the crypto market in the near future.