Fun

Second-Generation Lending Protocol Lendefi Is Coming for Compound’s Crown

News Feed - 2021-01-28 04:01:01

Second-Generation Lending Protocol Lendefi Is Coming for Compound’s Crown


PRESS RELEASE. Lendefi is a brand-new protocol aiming to provide opportunities such as lending and borrowing, leveraging and investing.


Lendefi is an innovative second-generation DeFi lending protocol that allows lenders to earn interest on stablecoin deposits, and for borrowers to obtain undercollateralized loans (UCLs) to invest in popular digital assets.


The main advantage of Lendefi is the possibility of undercollateralized loans, meaning you can borrow more than the collateral (serving as a type of security) you provide. Existing lending protocols, for their part, allow overcollateralized loans, meaning users are limited to less than the value of the collateral when borrowing. The example scenarios below illustrates the difference.


• Undercollateralized: You can provide collateral worth 50,000 USD and borrow another asset worth more than 50,000 USD.

• Overcollateralized: You can provide collateral worth 50,000 USD and borrow another asset worth less than 50,000 USD.


With undercollateralized lending, the borrower can leverage their available capital while pursuing investment opportunities that would previously have been beyond reach. Clearly, this will make digital assets more intriguing to investors accustomed to accessing such mechanisms in traditional markets.


Lendefi vs Compound


Undercollateralized borrowing being the primary point of divergence as compared to other lending protocols, the mechanism of ensuring both parties’ trust is different. While Compound allows loaned assets to be withdrawn, and thus requires overcollateralization to protect the lender from default, Lendefi keeps the collateral escrowed within the protocol.


While the interest rate offered by Compound is variable, Lendefi provides a fixed rate for borrowers and keeps it variable for lenders. Interest rates will be updated periodically by the DAO. Because the costs for borrowing are predictable, and thus easier to integrate into risk management processes or trade calculations than variable rates, borrowers are likely to find Lendefi attractive.


Interoperability


The interoperability of Compound and Lendefi gives users the option to borrow with a wide range of assets. For example, a borrower could utilize Compound to obtain an overcollateralized loan for USDC using BAT as collateral, then use USDC on Lendefi to take out an under-collateralized loan to invest in wBTC. This interoperability may become deployed as a third-generation protocol itself.


Similarities


While the mechanism of ensuring trust between borrowers and lenders varies between Compound and Lendefi, they are based on the same governance principles and restriction to popular assets.


Governance model


Both protocols are governed by a decentralized autonomous organization (DAO) which enables complete community and stakeholder control of the protocol.


Restricted to popular digital assets


Both protocols are restricted to popular digital assets. In the case of Lendefi, the selection is based on Uniswap liquidity, and further digital assets can be added as per the decision of the Lendefi DAO, as with Compound’s DAO.


Lendefi is a game-changer


Every protocol provides different use cases. By enabling lenders to earn interest on stablecoin deposits, and giving borrowers access to attractive undercollateralized loans, Lendefi can make a major splash in a rapidly expanding industry.


 


This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release. S&P Global: Cryptocurrencies Have Become Mainstream and Are Here to Stay, Bitcoin Reminiscent of Gold Rush FEATURED | 2 hours ago Massive Gamestop Short Squeeze Highlights the Fragility of Today"s Financial System FEATURED | 3 hours ago Tags in this story Compound, DeFi, Lendefi, lending


Image Credits: Shutterstock, Pixabay, Wiki Commons Use Bitcoin and Bitcoin Cash to play online casino games here.

News Feed

Analyst Spots New Critical Ethereum Price Levels With Options Expiry Over
Este artículo también está disponible en español. Popular crypto analyst Michaël van de Poppe has highlighted vital price levels in the Ethereum (ETH) market following a
Wall Street Pepe Meme Coin Nears $64M as Trump Promises Bitcoin Supremacy
David Bailey, a crypto policy advisor and aide to Donald Trump, shared details of his discussion with the President. According to Bailey, Trump is committed to building a pro-crypto environment in the US through policy m
US Authorities Charge Mango Markets Attacker — Defendant Arrested, Detained in Puerto Rico
US Authorities Charge Mango Markets Attacker — Defendant Arrested, Detained in Puerto Rico The U.S. Securities and Exchange Commission (SEC), the Commodities Futures Trading Comm
NFT Sales Soar: January 2023 Reaches Nearly $1 Billion in 30 Days With 41% Increase
NFT Sales Soar: January 2023 Reaches Nearly $1 Billion in 30 Days With 41% Increase Non-fungible token (NFT) sales increased 41.96% from the previous month, according to data recor
Hong Kong Regulator to Treat Some Crypto Exchanges Like Brokers
Hong Kong’s securities watchdog is to treat cryptocurrency trading platforms like traditional brokers if they offer security tokens, according to its second round of regulatory guidance for the industry.
Stanford’s Blyth Fund allocates 7% of its portfolio to Bitcoin
Martin Young3 hours agoStanford’s Blyth Fund allocates 7% of its portfolio to BitcoinKole Lee, the leader of Stanford’s Blockchain Club, pitched the student-run fund to invest in BlackRock’s spot Bitcoin ETF as ear
Crypto4Winners Looks to Offer a Unique Trading Platform With a Wide Range of Useful Features
Crypto4Winners Looks to Offer a Unique Trading Platform With a Wide Range of Useful Features press release PRESS RELEASE. Crypto4Winners(C4W) strives to actively manage customers&#x
MiCA threatens crypto firm exodus to Middle East: Regulatory expert
Zoltan Vardai11 hours agoMiCA threatens crypto firm exodus to Middle East: Regulatory expertThe upcoming regulatory framework could threaten a mass crypto exodus to the Middle East due to more favorable regulations.963 T
William Suberg35 minutes agoThere are now nearly 40M Bitcoin addresses in profit — a new record80% of Bitcoin addresses are "in the black" at $34,000, while BTC price still trades 50% below its own all-time
Price analysis 5/1: BTC, ETH, BNB, SOL, XRP, DOGE, TON, ADA, AVAX, SHIB
Rakesh Upadhyay7 hours agoPrice analysis 5/1: BTC, ETH, BNB, SOL, XRP, DOGE, TON, ADA, AVAX, SHIBBitcoin’s drop to $56,500 crushed bullish traders’ sentiment and took a heavy toll on altcoin prices but are generation
Bitcoin, Ethereum Technical Analysis: ETH Hits 3-Week Low as Bearish Momentum Increases Following The Merge
Bitcoin, Ethereum Technical Analysis: ETH Hits 3-Week Low as Bearish Momentum Increases Following The Merge Ethereum moved to a three-week low on Friday, as market sentiment remain
Valr Becomes Latest South African Exchange to Exit Crypto Arbitrage Market
Valr Becomes Latest South African Exchange to Exit Crypto Arbitrage Market Crypto exchange Valr has announced it has closed its crypto arbitrage service to new customers in order t