Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => DeFi tokens => Topic started by: Smilez on May 20, 2024, 07:44:21 PM
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May 22nd is a special day for Bitcoin, it's the Bitcoin Pizza Day. It's a reminder of the first time someone used Bitcoin to buy something (two pizzas!) back in 2010. Since then, cryptocurrency has come a long way, with new technologies and innovations emerging all the time.
One exciting development is DeFi which allows people to lend, borrow, and invest without traditional banks. DeFi lending platforms, in particular, have caught my attention. I'm really interested in how they work and their potential to disrupt traditional finance. The best way to learn is by trying them out, so I'm testing various lending platforms to see how they compare. What do you think about these platforms? Are they the future of lending, or are there still too many risks involved?
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They are not new and some went bankrupt already. One project that I know of decided to run away just a few months ago so I can say I'm still a bit bitter about these DeFi lending projects. What projects are you testing right now? I can say that most are still far off from disrupting traditional platforms. Too soon to say whether they are the future or not. For all I know banks can simply copy the process and place KYC if they want to. CMIIW.
That being said, it currently offers something new compared to traditional lending. It is easier to use since most of the time you can simply connect and lend/borrow easily. Just remember that some platforms might require KYC, especially if they don't want to deal with US scrutiny.
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Maybe I'm the only one who doesn't really understand Defi, borrowing and lending. Is Defi a platform or means for borrowing money? Hopefully someone will explain what defi is in the crypto world
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Hmm, OP never used to appear here after starting the topic seems like he got, busted by the Vice-City Police and nobody paid the release charges for him, but at the same time I cant get the idea of this, topic in the start OP tried to mention things about the BTC, good it seemed like to give a bullish touch to a topic, and then started explaining about DeFI and than an asked question, over all that a good approach to grab someone's attention.
But so sad still there are just 2 comments, anyway DeFi lending is risky, I'm not saying it is risky in every aspect but if you are lending with crypto collaterals, or directly in crypto assets rather than stable currency the market can slap you hard, so be careful with the volatility.
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Maybe I'm the only one who doesn't really understand Defi, borrowing and lending. Is Defi a platform or means for borrowing money? Hopefully someone will explain what defi is in the crypto world
Defi just means decentralized finance, it isn't exclusive to lending even though that's the most popular one. It depends on which definition you're following to know the scope of defi. Most products that were launched were traditional finance products with little to no middleman. They claim smart contracts or the blockchain will solve the trust issue so you don't have to rely on a centralized party to access it, although some use a loose definition of using a web3 wallet when they mention "defi product".
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Maybe I'm the only one who doesn't really understand Defi, borrowing and lending. Is Defi a platform or means for borrowing money? Hopefully someone will explain what defi is in the crypto world
The definition is easy is decentralized finance, what you can do with it is not just borrowing and lending it can theoretically cover any financial transaction aspect via smart contracts. One quick and more in-depth read is here (https://www.coindesk.com/learn/what-is-defi/) if you're interested, there are tons of materials and there is a ton to talk about it, it all comes down on your needs.
But so sad still there are just 2 comments, anyway DeFi lending is risky, I'm not saying it is risky in every aspect but if you are lending with crypto collaterals, or directly in crypto assets rather than stable currency the market can slap you hard, so be careful with the volatility.
Apart from being risky, the main problem is that you need collateral, so basically to get a loan you need to have more money than you need in that loan. And usually, people looking for a loan are pennyless.
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But so sad still there are just 2 comments, anyway DeFi lending is risky, I'm not saying it is risky in every aspect but if you are lending with crypto collaterals, or directly in crypto assets rather than stable currency the market can slap you hard, so be careful with the volatility.
Collateral is the problem of lending, as it may be liquidated if it declines by a certain percentage. Here, your loss will be double, and this condition does not exist in normal lending. DEFI lending is bad for a bear market or when the price changes dramatically.
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The defi lending plataform was a good expansion using smart contracts, despite we know that several projects had been hacked and still got hacked these days, loosing milions of costumers money.
Its a profitable business for only a few projects around wich are able to have Bilions staked into them, giving their token as reward to boost APY... its funny if we consider this tokens value should be near zero, as they hadnt liquidity to get traded without affect the price.
Some projects decided to start with pretty low emissions, wich made difficult to get the coin and its beneficts, making it expensive, while others used the unlimited supply to boost and make their own token worthless...several aproaches had been done and well i havent found a balance yet.
We deposit btc, eth, bnb get some apy boost with those Defi tokens wich they capture part of the revenue generated from costumers, all deposits earn around 80-90% and the remaining is the protocol fee soo they are able to get revenue without have the funds, until liquidations happens, and if the protocol gets something from them.
I had tryed different of this projects and well its good if you dont wanna to sell your coins, or dont wanna risk into coins and wanna just passive income, but the risk still there, one mistake into the contract and funds will be gone...sure its better stake stablecoins into this DEFI lending then into the banks but the risks are bigger as well the potencial returns.
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The defi lending plataform was a good expansion using smart contracts, despite we know that several projects had been hacked and still got hacked these days, loosing milions of costumers money.
Defi lending platform was good and profitable during the curfew period during the pandemic, when money was distributed for free and the interest rate on loans was low, these services offered higher interest and available liquidity which attracted more lenders to them.
Interest rates are now high and the specter of recession is near and everyone is afraid of losing their job and does not have enough money to put into these platforms, most of which went bankrupt last winter.
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The defi lending plataform was a good expansion using smart contracts, despite we know that several projects had been hacked and still got hacked these days, loosing milions of costumers money.
Defi lending platform was good and profitable during the curfew period during the pandemic, when money was distributed for free and the interest rate on loans was low, these services offered higher interest and available liquidity which attracted more lenders to them.
Interest rates are now high and the specter of recession is near and everyone is afraid of losing their job and does not have enough money to put into these platforms, most of which went bankrupt last winter.
DeFi still exists, but lending platforms seem to be collapsing one by one and many of them are closing their services...
I think it's just a hype which is now starting to fade.
Comparing to lending platforms from local banks, DeFi-based lending platforms usually don't require KYC... but that only applies to some regions... for users from the US it seems they will still have to do KYC because of the government's strict policies.
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When it comes to lending on decentralized and centralized platforms, those two are the same in that they ask their borrowers for collateral, and I don't think that's good because the style is no different from a traditional bank, to be honest.
For example, if you lend in a centralized exchange of around 200 dollars, the requirements that they will ask of you are that your total assets must be more than 200 dollars, of which your balances must be more than 300 dollars, and they must also be in stakes or farms. I'm not sure if I'm saying this right; it's just my idea instead. They will not lend below the amount you borrow the fund you have on their platform.
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DeFi still exists, but lending platforms seem to be collapsing one by one and many of them are closing their services...
I think it's just a hype which is now starting to fade.
The hype is gone because there are less money making opportunities and the rates are not the same.
Previously you had 1% interest in fiat in bank, the defi offering you 10% APY and lenders taking 15% interest cause they could make 50-100%a year.
Now when the bank is offering 5% insured and the best APY are around 10% for solid cryptos what's the point?
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When it comes to lending on decentralized and centralized platforms, those two are the same in that they ask their borrowers for collateral, and I don't think that's good because the style is no different from a traditional bank, to be honest.
Does no collateralized loan no longer exist? I'm sure some platforms allow users to borrow without depositing any collateral in the past. It's very limited but someone can get away with $100 easily. I don't think you can remove collateral anyway since it puts the lender at risk by doing so. There's no way any lender would use a platform that won't guarantee their money will be repaid to them. Even a 50% collateral is already risky for most users.
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Does no collateralized loan no longer exist? I'm sure some platforms allow users to borrow without depositing any collateral in the past.
In the past!
Nobody is going to give a loan for a guy doing basic KYC an ocean across!
How are you even going to reinforce this, plus the cost of doing so would just cut into any profits you've made, not even talking that once you do you might find out your platform did not respect the laws of that country and you lose your case in court.
People and companies can't get their money back with real paper and contracts for years sometimes in international dispute but a crypto loan? ;D
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Maybe I'm the only one who doesn't really understand Defi, borrowing and lending. Is Defi a platform or means for borrowing money? Hopefully someone will explain what defi is in the crypto world
- Let me explain to you in a simple way the meaning of the Defi lending platform. That's it, mate. It's a type of Dapps (decentralized application) that is built on the blockchain peer-to-peer lending and borrowing cryptocurrency. Unlike traditional financial systems, they operate even without intermediaries such as banks.
Now Defi lending works through earning interest; for example, if you enter crypto assets in a Defi platform, what will happen to the crypto you deposited will have interest. Second is what is called depositing collateral; this is the crypto assets you deposit that will be the collateral just in case you want to borrow money on the Defi lending platform. Also, as far as I know, the amount that will be loaned to you depends on the amount that you deposit on their platform; 50% of the deposit amount of your crypto is what they will lend you.
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Maybe I'm the only one who doesn't really understand Defi, borrowing and lending. Is Defi a platform or means for borrowing money? Hopefully someone will explain what defi is in the crypto world
- Let me explain to you in a simple way the meaning of the Defi lending platform. That's it, mate. It's a type of Dapps (decentralized application) that is built on the blockchain peer-to-peer lending and borrowing cryptocurrency. Unlike traditional financial systems, they operate even without intermediaries such as banks.
Now Defi lending works through earning interest; for example, if you enter crypto assets in a Defi platform, what will happen to the crypto you deposited will have interest. Second is what is called depositing collateral; this is the crypto assets you deposit that will be the collateral just in case you want to borrow money on the Defi lending platform. Also, as far as I know, the amount that will be loaned to you depends on the amount that you deposit on their platform; 50% of the deposit amount of your crypto is what they will lend you.
You have explained correctly, let me just add that DEFI lending platform differs from one another with their different terms and conditions, some lending platforms can offer a little more than 50 percent of the collateral provided for a loan, while some platform offer 50 percent, and some platform don't even offer up to 50 percent.
One important thing to note about DEFI lending platforms is the fact that, they won't just give any user loan, the user will have to provide collateral in a selected and supported cryptocurrencies, and how much the user is able to deposit as a collateral will determine how much the system will put out as a loan to the user.
Over all, it's a great innovation and one that have contributed its little quarter in the growth and advancement of crypto, and it still does by the way.
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You have explained correctly, let me just add that DEFI lending platform differs from one another with their different terms and conditions, some lending platforms can offer a little more than 50 percent of the collateral provided for a loan, while some platform offer 50 percent, and some platform don't even offer up to 50 percent.
One important thing to note about DEFI lending platforms is the fact that, they won't just give any user loan, the user will have to provide collateral in a selected and supported cryptocurrencies, and how much the user is able to deposit as a collateral will determine how much the system will put out as a loan to the user.
Over all, it's a great innovation and one that have contributed its little quarter in the growth and advancement of crypto, and it still does by the way.
I completely agree with your view. DEFI lending platforms have different rules for lending money. Some platforms lend up to 50% or more of collateral value while others lend less. A key part of DEFI lending is that users must provide collateral in specific cryptocurrencies which decides how much they can borrow. This new approach has greatly helped growth and development of cryptocurrency market.
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This new approach has greatly helped growth and development of cryptocurrency market.
Do you know when this collateral loan approach started? Based on some research that I've found, it looks like the DeFi market saw the most significant jump in 2021[1]. I'm not sure how much actually counts for lending platforms though. You saw a significant drop in the following year after that. Another article (which might be a bit biased) shows that the TVL dropped significantly in 2023 compared to 2022, going from ~$70 billion to $40 billion[2]. Still a huge market though.
Anyway, looks like some still believe the market will grow quite well in 2025[3]. CMIIW.
[1] https://www.statista.com/outlook/fmo/digital-assets/defi/worldwide#revenue
[2] https://hedera.com/learning/decentralized-finance/defi-lending
[3] https://ibsintelligence.com/ibsi-news/decentralized-finance-defi-market-set-to-soar-to-48-02bn-by-2031-study-shows/
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DeFi lending platforms are digital protocols that allow users to lend and borrow cryptocurrency assets in a decentralized manner, without intermediaries like banks. Here’s an overview of some of the leading DeFi lending platforms and their key features.