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2022 | OriginalPaper | Buchkapitel

From Banks to DeFi: the Evolution of the Lending Market

verfasst von : Jiahua Xu, Nikhil Vadgama

Erschienen in: Enabling the Internet of Value

Verlag: 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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Titel: From Banks to DeFi: the Evolution of the Lending Market
verfasst von: Jiahua Xu
Nikhil Vadgama
Verlag: Springer International Publishing
Buch: Enabling the Internet of Value
Print ISBN: 978-3-030-78183-5

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

Copyright-Jahr: 2022
DOI: https://doi.org/10.1007/978-3-030-78184-2_6

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