In the blockchain and cryptocurrency world, financial dApps are gaining a lot of traction. The rise of decentralized finance should not be ignored, even if it might not be everyone’s cup of tea.
For now, the DeFi industry remains in the very early stages. Even so, several key players have begun emerging in the lending segment.
One of the prominent lending applications in DeFi today goes by the name of dYdX. Although this is a non-custodial trading platform first and foremost, it can be catalogued as lending as well. More specifically, users can lend, borrow, and margin trade supported assets.
Interest rates for borrowers will vary based on demand and liquidity. The interest will accrue continuously and is paid to lenders directly. For borrowers, collateralizing the amount they borrow is crucial. dYdX maintains a strict rule of collateral equating 125% of the borrowed value accordingly. If the ratio drops below 115%, the borrower will be liquidated automatically.
Statistics-wise, dYdX seems to be getting a lot of attention. Over 91,000 ether is currently locked through this dApp alone. As the ethereum price rises again, the total value locked will increase as well. For now, that level sits near $16 million, which is still more than respectable.
The top lending dApp solution on Ethereum is called Maker. At its core, it serves as a decentralized credit platform supporting the Dai stablecoin. Anyone can create a Collateralized Debt Position by locking ether as collateral. Dai will be generated as a debt against this collateral.
The stablecoin accrues interest continuously, but also incurs a stability fee. This fee is paid in the native MKR token when the borrowed Dai is repaid. In the same process, the MKR fees are burned, as well as the repaid Dai. Similar to dYdX, there is a 150% collateralization requirement in place.
With over $454 million in total value locked, Maker is well ahead of other service providers. Users locked over 2.5 million ether at this time. It appears that more and more money is being locked in this project, giving users exposure to this popular Dai stablecoin.
This particular lending dApp isn’t mentioned often, even though it seems to be quite successful. It is an “extension” of the MakerDAo protocol above. For users with little or no technical and financial experience, this offering could be worth checking out.
Users can manage Collateralized Debt Positions, or CDPs. Furthermore, they can also keep track of CDP activity and perform bundled transactions to save on transaction costs. Users can also draw the Dai stablecoin, buy ether, and lock that ether in one transaction.
Statistics-wise, InstaDApp is doing quite well. It currently has over $59 million in total value locked. With over 350,000 ETH being put into this offering, it is evident that a lot of people see merit in this lending service.
Albeit some see Compound as another extension of MakerDAO, it isn’t necessarily the case. Compound positions itself as an algorithmic money market protocol. Users can earn interest or borrow assets against collateral. Those who provide liquidity to Compound’s pool will earn compounding interest immediately.
As is the case in lending, certain limits are in place. Users can never borrow more than 75% of their supplied asset balances. This depends on the quality of the asset in question. In some cases, the maximum amount to borrow sits at 50% oft hat portfolio.
So far, Compound has proven to be relatively popular. Over $102 million has been provided to the liquidity pool so far. This represents roughly 370,000 ether. Other supported assets include BAT, Dai, REP, USDC, WBTC, and ZRX.