Defi Lending platforms

[Fivestar4everMVP]

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.

[Themepen]

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.

[joniboini]

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/

[RM]

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.