DeFi: Borrowing And Lending

Borrowing and lending is one of the main categories dominating Defi today.

DeFi enables a user to programmatically take out a loan in the absence of an application review or even a bank account. In some DeFi applications, the borrower does not need to go out and find a lender. Instead, the lender is the smart contract itself and interest rates are calculated algorithmically based on supply and demand. In other applications, a fixed interest rate is guaranteed in exchange for loaning your coins to the contract.

DeFi allows borrowers to stake their digital assets as collateral, which are locked within a smart contract until the loan is repaid. Due to the nascency of the space, collateral requirements can be very high, making them impractical. Examples of DeFi lending platforms include Compound, Aave, Maker.

Recently, Compound has built a new functionality which creates a commonly used term in DeFi, ‘Yield Farming’, where users are rewarded with tokens by participating in the token economy and providing liquidity to the protocol. This trend has since caught on by other DeFi protocols.

• Website: https://hbsplatform.com
• Medium: https://medium.com/@HBSPlatform
• Reddit: https://www.reddit.com/user/HBS_Platform