We have seen a major theme emerge almost every year in Cryptoverse which defined the path of the DLT movement going forward. Started off with a craze for smart contracts when Ethereum launched in 2015. ICOs were a big thing with the euphoric resurgence of Cryptocurrencies in 2017. Stable coins emerged as popular products of the DLT movement in 2018. And 2019 might very well be the year of Decentralized Finance or DeFi as it is becoming popularly known as these days. This relatively new term basically defines the use of Blockchains, Cryptocurrencies and smart contracts to provide financial accessibility & inclusiveness to those who have been kept out the current system by geographic, economic & financial barriers.
The Fintech revolution has provided a breaking ground in this regard where people have access to all financial services, which have usually been provided by institutions in the legacy financial system. Everything is available in the palm of their hands with the wide-spread adoption of smartphones. As we are seeing signs of maturity in the digital banking arena, a new wave in the form decentralized borrowing/lending is emerging. Recently I came across a website called DeFi.Review which basically compares some of the major decentralized lending platforms out there. Although the website is still in its Beta, it provides a good starting point for someone who is looking to take this route.
The website distributes the DeFi platforms in six different categories – Lending, Swap DEX, DEX Protocol, Payments, Stablecoins, Prediction Markets & Derivatives. Talking about Crypto lending platforms, following are six prominent ones showcased on the website.
Of the ones listed on the Defi.Review, EOSREX & MakerDAO control about 90% of the DeFi loan market with crypto collateral. The former has ~ 734 million locked up in EOS while the latter has ~ 441 million worth of underlying Ether deposits. MakerDAO is popularly known for its decentralized stable coin DAI, collateral loans & community governance. Here is a list of some of these & some other crypto lending platforms for your review with their tag line description.
NOU – A Multi Assets decentralized debt marketplace connects lenders & borrowers with support for ETH, DAI, MKR and 8 ERC20 tokens using the Nuo protocol. Offering customized & leveraged borrowing with no hidden fees – “The non-custodial way to lend, borrow or margin trade crypto assets”
ETHLend – The platform offers intuitive one-click solution with a calculator on the web site to figure out how much you can borrow using your existing holdings BTC, ETH & ERC 20 based tokens. The term includes 3% minimum yearly interest with a flexible loan duration of 0-12 months with fees as low as 0% – “The World’s First Crypto Lending Marketplace”
Dharma – This Coinbase-backed DeFi platform has a simple & intuitive interface and offers Crypto lending/borrowing in Ether, DAI & USDC at an interest rate of 2.5%, 11% & 8% respectively – “Experience Magical Internet Money”
Compound – An open-sourced protocol which bases its philosophic on creating algorithmically efficient money markets. The Ethereum based protocol maintains excess liquidity with the interest rates dependent on the demand & supply of the digital assets – “Compound your Crypto”
Cred – Offering returns of up to 10% on your crypto assets with no hidden fees or minimum investment. Borrow USD, Euro & other fiat currencies or Earn using your BTC, XRP, ETH holdings – “The trusted way to earn and borrow in the token economy”
BlockFi – The Wealth Management platform offers a Crypto Interest account where you can earn up to 6.2% annually – “Earn interest. Borrow USD. Grow wealth. Do more with your crypto.”
SALT – Global platform which has an insurance policy that covers 100% of the collateral offering your protection from theft, fraud or third-party breach – “Providing sound methods to manage, hold, and capitalize on cryptocurrencies.”
These decentralized platforms have the advantage of providing you with added security, transparency & accountability with no requirement of credit checks which certainly makes them more enticing & inclusive, but at the same time they need Cryptos as collateral for most of these loans, which may be a challenge unless we see a widespread adoption of Cryptocurrencies. Having said that, the underlying crypto collateral theme itself can fuel the growth of the broader crypto economy.
Most of these platforms, however, are still in the stage of infancy with limited offerings & educating the general public about these decentralized platforms would perhaps be the first step in helping this new facet of futuristic finance mature, expand & achieve the massive potential it presents.