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DeFi Lending Protocol

Leading DeFi Lending Protocols Revolutionising Real-World Asset Financing

Last Updated on February 22, 2024 by Hamza Khan

Decentralized finance (DeFi) involves a type of financial services that run on blockchain technology. Unlike traditional financial services that operate under the control of centralized authorities such as banks, DeFi services are independent and autonomous. Although, in comparison to traditional finance, DeFi is still relatively small, it is rapidly growing. One such area where DeFi finance has grown is the DeFi Lending Protocol. According to DeFi Pulse, the Total Value Locked (TVL), as of March 2023, in DeFi lending and borrowing protocols is over USD 120 billion. DeFi Lending Protocols provide an opportunity for users to borrow and lend funds. In addition, these protocols help lenders earn interest on crypto assets. Below are some of the leading lending protocols.

Top DeFi Lending Protocols In 2023

  • AAVE

Aave is a decentralized money market protocol. The launch of Aave marked a major turning point as it became the first platform allowing users to engage in lending, borrowing, and earning interest on their crypto assets. It provides users with a trusted and effective platform for managing their funds. AAVE allows users to deposit money into the market and earn passive income. Also, borrowers have the option to borrow funds either in an over-collateralized or under-collateralized manner. With Aave, there is no need for a broker, as the entire system runs independently through the use of smart contracts on the Ethereum blockchain. The current price of Ave is $78.45, and it has a trading volume of $72.98 million in the past 24 hours. 

  • Internet Computer 

Internet Computer is a decentralized blockchain network created by the Dfinity Foundation. It supports smart contracts built on a decentralized protocol called the Internet Computer Protocol (ICP). The native token is ICP. It is also the utility token that allows users to engage in the governance of the ICP network. ICP lending provides users with the opportunity to lend their ICP to others in return for receiving interest payments. Currently, the price of ICP is $4.17, and it has a trading volume of $12.85 million over the past 24 hours. 

  • Maker (MKR)

Maker (MKR) is a platform designed for peer-to-contract lending. It allows over-collateralized loans, with the collateral being stored securely in a smart contract. In return, users receive a stablecoin called Dai; this is pegged to the value of the US dollar. The security of Dai comes from a dynamic system of collateralized debt positions (CDP), self-regulating feedback mechanisms, and incentives from external actors. Dai can be given away for free, used to pay for goods and services, or saved for the long term. The current price of Maker is $978.82, and it has a trading volume of $101.75 million over the past 24 hours.

Takeaways

The rise of blockchain technology and DeFi lending protocols is transforming real-world asset financing. These protocols are breaking down the barriers of traditional lending systems by increasing accessibility, promoting financial inclusion, and streamlining processes.

DeFi lending protocols provide people and businesses with a chance to obtain financing in a way that is both efficient and secure. 

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