WHAT IS DEFI? DeFi is an acronym for "decentralized finance," refers to a group of financial tools built on a block chain. The idea of DeFi lending and borrowing is existed to make it possible for anyone with Internet access to lend, borrow and bank without the use of middle men. This is one of the most rapidly expanding sectors of the block chain and decentralized web space. Decentralized finance has been promoted as a potential solution for lowering the barrier to entry for those who have difficulty in opening bank accounts.
DEFI LENDING
The goal of DeFi lending platforms is to provide crypto loans in a trust less manner that is without intermediaries and to allow users to list their crypto coins on the platform for lending purposes. Borrowers can take out loans directly through the decentralized platform known as P2P lending. Defi has the highest lending growth rate among all decentralized applications and is the most common contributor for locking crypto assets.
VALUE OF DEFI LENDING
The underlying value of DeFi lending may rise or fall, but sitting idle in wallet which earns no interest. Holding a particular cryptocurrency may not result in any earnings. DeFi lending allows the users to lend their crypto to others while earning interest. Banks have always made extensive use of this service. Any one can become a lender in this DeFi world. DeFi lending can be accomplished through lending pools. Lenders may redeem deposited assets at any time, and borrowers may repay part or all of their debt.
DEFI BORROWING
DeFi borrowing offers you the innovations in efficiency, access, and transparency. Borrowing in DeFi allows any of the users to become a borrower without providing any personal information, proving identity. DeFi borrowing is accomplished through smart contracts on open –source block chain.
VALUE OF DEFI BORROWING
The noted value of DeFi borrowers is that they have the option of borrowing from one of the protocols and putting down collateral. The fact is that these types of loans are over-collateralized as an important feature. Borrowers have to deposit more cryptocurrencies as collateral than usual. DeFi borrowing includes unexpected expenses, avoiding forced liquidation of crypto holdings that are expected to appreciate, leveraging exposure on a crypto asset for speculation purposes, and avoiding capital gains tax.
FEATURES OF DEFI LENDING & BORROWING PLATFORM
DEFI WALLET
The secure integration of the DeFi wallet on the platforms allows both the lenders and the borrowers to deposit their crypto assets. DeFi wallet supports the spectrum of stable coins.
SMART CONTRACT
The smart contract contributes to finish decentralization of the platform. As it is an automated digital intermediary the transaction performed on this platform is completely secured.
LIQUIDITY POOL
The liquidity pool entails the funds deposited by the lenders. It also ensures that DeFi platform has adequate funds accessible to be borrowed.
RISK MANAGEMENT
The meticulously crafted risk management system safeguards lenders from any loss. It is modified under the volatile moments of the borrowed assets.
SECURITY
Security platform is fortified with market lending security measures to confirm finest security of the borrowers and lenders funds.
DEVELOPMENT OF DEFI LENDING AND BORROWING PLATFORMS
The development of DeFi lending and borrowing platforms indicates the means of creating a system equipped with useful financial tools that allows the users to access funds without having to work with exchanges. Activities like lending, borrowing, cryptocurrency trading, earning interest on accounts are conducted with the help of block-chain based smart contracts. One of the most distinctive features in development of DeFi lending and borrowing platforms is that it is free from centralized administration that typically controls the mode of transaction. At the beginning of the process, the borrower provides the crypto assets as a collateral .Borrowers pay a different interest rate and the interests were received by the lenders. Development of lending and borrowing facilitates P2P collaboration between their users. The former can get a loan as usual,and lenders can make money by lending crypto assets. It also offers high interest rates for long time investors. Furthermore the decentralized finance in lending and borrowing are simple to use by who have signed up and coupled their digital wallets to begin employing a new platform. Due to the above mentioned reason development is given more importance in lending and borrowing DeFi.
STEPS TO BUILD DEFI LENDING AND BORROWING PLATFORMS
STRATEGIES
Two main most strategies involved in building DeFi lending and borrowing platforms are staking and yield farming.
STAKING
.Staking is the best way to place your crypto with full protection. Most of the DeFi comes supply staking rewards with the style of governance token which might either be unbroken as balloting power or traded.
YIELD FARMING
Yield farming would be the most complicated investment strategy that mixes lending, borrowing and staking so as to maximize profits through interest earned.
DEFI PORTFOLIO WITH ZERION
Whatever you invest you can simplify your investment process with zerion. It is a non-custodial wealth management platform that brings building of Deify lending and borrowing together.
*Improved loan origination speed *Greater consistency in lending decisions *Compliance with federal, state and local regulations *Analytics for process improvement and portfolio profitability *Transparency *Immutability *Programmability *Interoperability *Self-custody.
POPULAR PROTOCOLS IN DEFI LENDING AND BORROWING Maker Maker is a one-of-a-kind DeFi crypto lending platform that allows only DAI tokens to be borrowed. DAI is a stable coin who pegged with US dollars. Aave Aave is a non-custodial open-source decentralized lending protocol that allows users to earn interest on deposits and borrow digital assets. Aave provides simplified and decentralized access to a diverse range of digital assets. Compound Compound is a decentralized based bloc chain crypto protocols which is used to lend and borrow cryptos. The development of DeFi lending and borrowing platforms has the potential to completely transform the global economic environment. If you are planning to build your DeFi lending and borrowing platforms shamla tech will be your reliable technical building partners.