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Defining the Internet of Value Read chapter Read first chapter

2022 | OriginalPaper | Chapter

From Banks to DeFi: the Evolution of the Lending Market

Authors : Jiahua Xu, Nikhil Vadgama

Published in: Enabling the Internet of Value

Publisher: Springer International Publishing

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Abstract

The Internet of Value (IoV) with its distributed ledger technology (DLT) underpinning has created new forms of lending markets. As an integral part of the decentralised finance (DeFi) ecosystem, lending protocols are gaining tremendous traction, holding an aggregate liquidity supply of over $40 billion at the time of writing. In this paper, we enumerate the challenges of traditional money markets led by banks and lending platforms and present advantageous characteristics of DeFi lending protocols that might help resolve deep-rooted issues in the conventional lending environment. With the examples of Maker, Compound and Aave, we describe in detail the mechanism of DeFi lending protocols. We discuss the persisting reliance of DeFi lending on the traditional financial system and conclude with the outlook of the lending market in the IoV era.

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previous chapter The New Internet of Value Financial Ecosystem
next chapter Real Estate and the Internet of Value
Footnotes
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Metadata
Title
From Banks to DeFi: the Evolution of the Lending Market
Authors
Jiahua Xu
Nikhil Vadgama
Copyright Year
2022
Book
Enabling the Internet of Value

Print ISBN: 978-3-030-78183-5

Electronic ISBN: 978-3-030-78184-2

Copyright Year: 2022

DOI
https://doi.org/10.1007/978-3-030-78184-2_6