Category: 3. What is DEFI automated borrowing and lending?

DEFI has opened up a whole new world of financial services that are much easier to access, more transparent and give the user greater control. But against these benefits, you have to weigh the risks of transacting in a totally unregulated space with immature technology and business models that aren’t fully stress tested. So before…

Advantages Cutting out Intermediaries One of the biggest criticisms of traditional finance is the number of intermediaries that add to the cost of borrowing or lending. By functioning in a Peer-to-Peer form more value can be shared with the user and the DAO that sits behind it. Removing trust also means that your personal data…

In traditional finance secured loans generally use an illiquid asset (like a house) – something which isn’t easy to sell quickly – to borrow a liquid asset, like money. In the crypto version of a secured loan, one liquid asset is used to borrow a different liquid asset, so what’s the point? There are plenty…

In the context of the layered structure of DEFI, a borrowing and lending protocol will consist of a number of Smart Contracts (the Protocol Layer) the function of which are simplified into a dApp/website (Application Layer).  The Protocol will be supported by one or more blockchains (Settlement Layers) charging fees to confirm DEFI transactions in…

To understand how DEFI borrowing and lending work it helps to summarise how decentralised finance functions. There are five distinct layers: The Settlement Layer  This is where any transactions and balance changes are recorded. In traditional finance, this would be a bank, but in DEFI the role of the central authority is replaced by a…

Automated DEFI borrowing and lending offer crypto users the two most fundamental banking services, earning interest on crypto deposits or paying interest to borrow crypto at interest, but crucially with the bank removed from the equation. DEFI – decentralised finance – works on a purely Peer-to-Peer level. Users hold their assets in crypto wallets like…