DeFi Lending Platform Development On Aave and Compound

Defi Lending And Borrowing Platform Development

By utilizing the open-source DeFi protocols, to create decentralized lending and borrowing platforms like Aave, Compound, and more is termed as DeFi Lending and Borrowing Platform development. As Lending and borrowing are the major use cases of DeFi protocols, every crypto related company started extending their services to provide DeFi related lending and borrowing development services. We Bitdeal, provide DeFi Lending and Borrowing Platform Development Services with inbuilt benefits for lenders and borrowers which makes the platform more attractive in the crypto market.

Catch our experts to launch your own DeFi platform like Aave now!  

Let us deeply look into the concept of DeFi lending and the benefits of DeFi Lending platform development here!

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What is DeFi Lending and Borrowing ?

The term DeFi refers to decentralized finance, which aims to provide a transparent, permissionless, and open-source financial ecosystem. DeFi Lending is the process of offering and borrowing cryptocurrency assets as a loan on a permissionless decentralized medium which has decentralized smart contracts that would automate all the crypto lending transactions without the involvement of no middleman.  

The platforms that offer these kinds of lending services are known as DeFi P2P Lending platforms and there are more popular decentralized applications(Dapps) available in the crypto market that provide DeFi P2P lending options.

How Does DeFi Lending and Borrowing Works?

The working of the DeFi Lending platform is similar to the traditional bank's protocols.

Working of DeFi Lending

• Initially, users have to deposit their assets and they earn interest when someone borrows that digital assets.
• However, the intermediary is replaced by a smart contract in DeFi lending,it dictates the loan terms.
• When a smart contract has been deployed on a blockchain network which is self-executing and its operations can not be stopped unless both parties agree to the terms.
• As DeFi relies on blockchain which is transparent and immutable, the lenders earn high returns,where risks can be accessed clearly.
• The interoperability and standardization of this DeFi lending platform can minimize the cost of the overall system.

Working of DeFi Borrowing 

As like lending, DeFi borrowing works as the following:

• A borrower can obtain fiat loans from lenders with their crypto assets which acts as collateral if borrowers fail to repay the loan.
• This exchange of crypto loans occurs when both the lender and borrower accept the rate of interest. As like Traditional loans or borrows, here the crypto loans are transferred to the borrower's account and borrowers pay interest to the lender and when the complete amount is paid back, the lender releases the collateral which acted as security.
• This borrowing process occurs in DeFi lending platforms without the involvement of third parties.

It also allows the borrowers to use fiat as collateral to earn crypto assets.

Why Prefer DeFi Lending & Borrowing Over Traditional Lending and Borrowing?

Here let us look at the main advantages of choosing DeFi Lending over the traditional lending.

As we all know, DeFi Crypto lending inherits blockchain technology,it offers high end transparency and immutability.

High-end Transparency

In DeFi crypto lending platforms, smart contracts act as a central authority and handle all the lent & borrowed assets and stores it in the decentralized blockchain which everyone can view and verify. Thus it provides complete transparency over all the funds.

Quick Access

With no involvement of central authority, the assets can be lent and borrowed directly and thus DeFi P2P Lending platforms offer its users greater access to assets over time.

Flexibility and Speedness

To process any lending or borrowing of assets, you just have to open an account in DeFi Lending Platform, have assets in your crypto wallet and takes a few seconds to open smart contracts and process the lending or borrowing process. Thus DeFi lending is high speed with great flexibility.

Censorship Resistance

The decentralization of DeFi Lending guarantees that there is no preferential treatment and thus there are equal rights and opportunities for everyone to make transactions in the blockchain.

Price Efficiency and Immutability

The ability of DeFi to attract more users through its nature of immutability,transparency, and speed, the market demand which is defined by asset price increases. Thus, DeFi lending platforms aim for high price efficiency.

These are the main reasons to prefer DeFi lending and borrowing platforms over traditional lending platforms for your financial needs.

Key Advantages of DeFi Lending and Borrowing

Listed here are the reasons for the need for DeFi based crypto loans and their advantages over traditional systems.

• Highly Flexible lending and borrowing process
• Faster Fund Transfer
• Ultra Transparency in Transactions
• Lender Passive Income
• Higher Interest Rates over Traditional Saving
• Permissionless Processing
• Open access to everyone
• Immutable, that no one can edit or delete any transactions

End User Benfits Of DeFi Lending Platforms 

With conventional earning interests from the crypto assets lending process, DeFi lending and borrowing platforms offer some greater benefits for their lenders and borrowers.

Here are some of the major benefits lenders and borrowers enjoy from DeFi P2P Lending platforms.

Margin Trading 

In DeFi lending platforms the user can purchase any asset and directly trade them in any other exchange for some other cryptocurrency. This shows that margin trading in centralized exchanges and also offers margin trading in unsupported platforms too.

Long-Term Investment Rewards

For investors who leave their cryptos idle, DeFi platforms allow a way to lend those assets and earn additional cryptos from interest over a capital appreciation or HODL strategy.

Arbitrage between CEX and DEX

Users with access to credit in fiats can borrow those for lower rates than DEX and sell those on CEX for crypto assets. Again can lend those on DEX to earn arbitrage fees. Most of the DeFi Lending platforms with stricter KYC offer this kind of benefit for both lenders and borrowers.

Flash Loans

Many DeFi platforms allow their users to borrow assets to execute some other functions and pay them back at the end of a certain period is known as Flash loans. Most popular DeFi Lending platforms like Aave, offer Flash loans features for their users.

Non-Taxable Liquidity

Obtaining crypto loans against their collateral to gain fiat currency, is the best way to avoid taxes over the gains by investors and asset holders of DeFi lending platforms.  

These are some of the benefits that lenders and borrowers get through DeFi lending platform usage for their lending and borrowing services.

Popular DeFi Lending and Borrowing Platforms/Protocols

Ethereum dominates the DeFi lending and borrowing space. There are many popular open-source DeFi protocols in the market for lending and borrowing. Here let us deeply look into the top 5 DeFi Lending and Borrowing Platforms in the crypto market.

Aave

Aave is a popular open-source non-custodial DeFi lending protocol that shifted from DeFi P2P lending strategy to a liquidity pool strategy.

• Founder- Stani Kulechov
• Blockchain Network - Ethereum
• Total Value Locked - $548.3M USD
• % of Minimum Collateralization - 133%
• Native Token - LEND
• Some Supported Crypto Assets - ETH, USDC, DAI, REP, TUSD, BUSD, and more.

Key Features of Aave

Flash Loan 

Aave allows its borrowers to take loans without locking any collateral for a limited time and if the loan is not paid back, it gets automatically reversed. The repayment of loan is about 0.09% nominal fee in LEND.

Rate Switching

Aave allows its borrowers to switch between stable and variable interest rates. It's hard to estimate the interest rate of long term borrowing, due to the volatile nature of interest fees in DeFi.Thus, by using this feature of Aave, the borrowers choose a fixed rate if the predicted interest rate increases and shuffles back to the floating rate if the interest is reduced.

Compound

Compound, an open source lending protocol that allows users to earn interest and also borrow assets against collateral on Ethereum network.

• Founder- Robert Leshner
• Blockchain Network - Ethereum
• Total Value Locked - $648.5M USD
• % of Minimum Collateralization - 133%
• Native Token - COMP
• Some Supported Crypto Assets - ETH, USDT, DAI, REP, BAT, WBTC, and more.

Key Features of Compound

1. No lower limit to lend and borrow
2. No requirement of KYC or ID verifications
3. Compound Protocols reserves only 10% of interest and the remaining goes for the lenders.

 

Maker

Maker is another crypto lending platform with DeFi open source protocols which primarily offers lending and borrowing of DAI.

• Founder- Rune Christensen
• Blockchain Network - Ethereum
• Total Value Locked - $925.3M USD
• % of Minimum Collateralization - 150%
• Native Token - MKR
• Some Supported Crypto Assets - DAI token, ETH,BAT,DGD,ZRX and more.

Key Features of Maker

Utility

A way to generate DAI and pay as stability fees along with the borrowed DAI to close a position 

Governance

A way to vote and implement various policies in the Maker platform such as collateral ratio, stability fee, and so on.

Recapitalization

When the total collaterals locked in CDP are not enough, the Maker system mints and sells MKR to raise capital to cover the existing DAI.

Nuo Network

Nuo is a non-custodial DeFi debt protocol that allows lenders or borrowers to over collateralize their loans that can be revoked later from the platform.

• Founder- Siddharth Verma, Varun Despande, Ratnesh Ray
• Blockchain Network - Ethereum
• Total Value Locked - $3.3M USD
• % of Minimum Collateralization - 150%
• Native Token - MKR
• Some Supported Crypto Assets - DAI,ETH,SAI,ZRX, USDC and more.

Key Features of Nuo Network

1. An user-friendly lending platform compared to others
2. Liquidation Fees is 2% lower than all other DeFi lending protocols
3. Offers Highest Interest Rates with a large variety of assets.

Dharma 

Dharma is a non-custodial DeFi lending protocol which allows users to lend and borrow DAI or USDC and receive variable interest rates.

• Founder- Nadav Hollander
• Blockchain Network - Ethereum
• Total Value Locked - $1.3M USD
• % of Minimum Collateralization - 150%
• Native Token - Dharma Tokens(dTokens)
• Some Supported Crypto Assets - DAI,ETH,ZRX,USDC and more.

Key Features of Dharma

1. Simple and automated Crypto Wallet
2. Fiat Gateway
3. Ease to access with high security

EOSREX is a DeFi Lending platform in EOS blockchain network with TVL of $600M USD is also a popular DeFi platform.

Some other popular DeFi Lending and Borrowing platforms are as follows:

1. Mainframe
2. InstaDApp
3. dYdX
4. bZx
5. KitteFight and more.

Who We Are?

We Bitdeal - Leading DeFi Development Company offers a wide range of DeFi services ranging from DeFi Yield Farming Platform Development, DeFi Token Development, DeFi Lending, and Borrowing platform development to DeFi Wallet development,DeFi Smart Contract Development,DeFi Staking Platform development and more.

Our DeFi developers are skilled in developing any kind of DeFi platform by leveraging the open-source DeFi protocols available in the market. With deep and clear knowledge about this decentralized finance protocols, our DeFi Developers can help you in launching your own DeFi platform like Yearn.Finance, Aave, Uniswap, Compound, and more.

You can catch our experts anytime to get the complete details about our DeFi development services and solutions that we offer for startups and fintech enterprises.

DeFi Lending And Borrowing Platform Development

We, Bitdeal a leading DeFi Development Company offers end-to-end defi lending platform development services by leveraging famous DeFi Protocols such as Aave, Compound and more with high-end support. 

Our developers inherit attractive features in DeFi lending platform development to make your DeFi lending platform more popular as Aave, Compound and more. Our DeFi lending platform development includes the following features:

1. Flash Loan
2. Rate Switching
3. Fiat Gateway
4. Crypto Wallet
5. Margin Trading
6. Investment Rewards
7. Arbitrage Fees
8. Recapitalization
9. Automated Yield Farming 
10. Liquidity APIs and more.

We assure you with the best DeFi Lending and borrowing development services at an affordable cost.

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