DeFi Lending

We all know DeFi has been a hot topic of 2021, maybe THE hottest topic, but is that it? Are we done with DeFi? Nope, I don’t think so, we’ve barely started.

Remember the whole crypto space is still early. The global cryptocurrency market will hit $4.94 billion by 2030, more than triple its estimated size of $1.49 billion in 2020.

Source Cited:

https://www.yahoo.com/now/cryptocurrency-market-more-treble-2030-094803219.html

DeFi is definitely here to stay. The whole decentralised space is going to continue to balloon, and as early adopters we need to make bank off it.

Why should anyone invest in crypto? There’s little doubt that digital currencies have seen remarkable growth. Spurred on by the incredible growth of bitcoin (BTC) and ether (ETH), the field of cryptocurrencies has only continued to expand.

In addition to initial coin offerings (ICOs), there are now many new types of blockchain investment products, from decentralized finance to non-fungible tokens. Many digital currency enthusiasts believe that these investments could produce a new batch of digital currency millionaires (or billionaires).

Buy Crypto with Credit Debit Card

https://mkgtaxconsultants.com/buy-crypto/

Part of your strategy should be how you grow your crypto collateral, not just buying crypto and waiting for it to increase in value, but using it to earn you more.

Enter stage left, DeFi lending. Decentralization allows us to be our own banks. Already we have options to make it happen, and here are several different lending options currently available. Enter HoneySwap, Aave, Compound, Celsius and Yield.

Alongside crypto purchases, staking, geysers and more, lending out your crypto is a profitable way to increase your wealth. Here is a brief run down comparing them side by side.

HoneySwap https://honeyswap.org

1Hive is a DAO that issues and distributes a digital currency called Honey. Honey holders stake on proposals using Conviction Voting to determine how issuance is distributed. By supporting proposals that increase the value of Honey, a positive feedback loop drives growth and sustainability. Conviction Voting allows everyone to participate and shape the direction of 1Hive, while preventing anyone from taking control or ownership.

Metropolis DAO LLC

https://finance.metropolisdao.org/

ERC20 token listings

https://cointrt.co

Aave. aave.com

A decentralised money market platform where lenders post collateral on the platform, allowing them to lend in the form of an aToken like Compound and their cToken, however the aToken is pegged 1:1 to the collateralised asset allowing it to be used as if it were the deposited collateral. The lender then accrues interest tied to their deposits. Two interests rates are offered, stable or variable offering more or less volatility depending on the lender’s risk tolerance and lenders can switch between the two. They also offer flash loans using pooled funds without collateral.

Whilst on the other side the borrower posts collateral by purchasing DAI. The borrower can then borrow in ETH. This allows the borrower exposure to a diverse range of cryptos without the need to own them outright.

Compound. Compound.finance

The original money market platform. Compound allows you to deposit your crypto to earn interest. They launched to a frenzy. Users rushed to deposit and earn. In return users would receive COMP for participating in the Compound ecosystem, both lenders and borrowers.

Lenders deposit assets in pools, and then receive cTokens to represent the underlying asset. Interest is based on the demand for the asset, the greater the demand. the more interest they earn, incentivising lenders to add to the pools.

Borrowers draw from the pooled funds but as the pool grows and interest increases, borrowers are deterred from over stretching themselves.

Celsius. Celsius.network

Is basically a middleman. Lenders deposit crypto, which Celsius then distributes to borrowers. The lender is then paid interest on their collateral set by Celsius (minus they’re cut). Lenders and Borrowers can earn greater interest if CEL tokens are purchased.

Yield. Yield.credit

DeFi lending with fixed guaranteed interest rates. Lending and borrowing on the platform is individualised, not pooled. Lenders earn guaranteed rates of interest, no longer having to worry about market dynamics causing the rates to trend to ~0%, while borrowers that maintain loans and repay on time earn YLD, the token native to the platform.

Now let’s look at some pros/cons of each platform:

Aave.

Pros Extensive collateral optionsInnovative DeFi products

Cons Rates are dynamic and typically trend towards ~0%

More complex platform to understand

Compound.

Pros Easy to use platform

Cons Rates are dynamic and typically trend towards ~0%

Limited collateral options

Celsius.

Pros 25+ collateral options

No fees or penalties