PRESS RELEASE. Lendefi is a brand-new protocol aiming to supply alternatives similar to lending and borrowing, leveraging and investing.
Lendefi is an modern second-generation DeFi lending protocol that enables lenders to earn curiosity on stablecoin deposits, and for debtors to acquire undercollateralized loans (UCLs) to put money into well-liked digital belongings.
The foremost benefit of Lendefi is the potential for undercollateralized loans, which means you may borrow greater than the collateral (serving as a sort of safety) you present. Existing lending protocols, for his or her half, permit overcollateralized loans, which means customers are restricted to lower than the worth of the collateral when borrowing. The instance situations beneath illustrates the distinction.
• Undercollateralized: You can present collateral price 50,000 USD and borrow one other asset price greater than 50,000 USD.
• Overcollateralized: You can present collateral price 50,000 USD and borrow one other asset price lower than 50,000 USD.
With undercollateralized lending, the borrower can leverage their obtainable capital whereas pursuing funding alternatives that might beforehand have been past attain. Clearly, this may make digital belongings extra intriguing to traders accustomed to accessing such mechanisms in conventional markets.
Lendefi vs Compound
Undercollateralized borrowing being the first level of divergence as in comparison with different lending protocols, the mechanism of making certain each events’ belief is totally different. While Compound permits loaned belongings to be withdrawn, and thus requires overcollateralization to guard the lender from default, Lendefi retains the collateral escrowed inside the protocol.
While the rate of interest supplied by Compound is variable, Lendefi offers a hard and fast fee for debtors and retains it variable for lenders. Interest charges will probably be up to date periodically by the DAO. Because the prices for borrowing are predictable, and thus simpler to combine into threat administration processes or commerce calculations than variable charges, debtors are more likely to discover Lendefi enticing.
The interoperability of Compound and Lendefi provides customers the choice to borrow with a variety of belongings. For instance, a borrower may make the most of Compound to acquire an overcollateralized mortgage for USDC utilizing BAT as collateral, then use USDC on Lendefi to take out an under-collateralized mortgage to put money into wBTC. This interoperability might grow to be deployed as a third-generation protocol itself.
While the mechanism of making certain belief between debtors and lenders varies between Compound and Lendefi, they’re primarily based on the identical governance ideas and restriction to well-liked belongings.
Both protocols are ruled by a decentralized autonomous group (DAO) which permits full neighborhood and stakeholder management of the protocol.
Restricted to well-liked digital belongings
Both protocols are restricted to well-liked digital belongings. In the case of Lendefi, the choice is predicated on Uniswap liquidity, and additional digital belongings could be added as per the choice of the Lendefi DAO, as with Compound’s DAO.
Lendefi is a game-changer
Every protocol offers totally different use instances. By enabling lenders to earn curiosity on stablecoin deposits, and giving debtors entry to enticing undercollateralized loans, Lendefi could make a significant splash in a quickly increasing business.
This is a press launch. Readers ought to do their very own due diligence earlier than taking any actions associated to the promoted firm or any of its associates or providers. Bitcoin.com will not be accountable, straight or not directly, for any harm or loss brought about or alleged to be brought on by or in reference to using or reliance on any content material, items or providers talked about within the press launch.