The DeFi lending market (DeFi lending platform) outperforms traditional bank offerings in many ways. At the same time, loans in the decentralized finance segment are still far from the volume of transactions executed by classic credit organizations.
One of the reasons DeFi is lagging behind is the skeptical attitude of users towards market opportunities. In particular, the level of popularity of decentralized finance is negatively affected by frequent protocol attacks and a low level of liquidity. Future DeFi Development Company is likely to increase security and eschew the conventional loan sector.
Characteristics of DeFi lending protocols
DeFi lending services or a lending platform have similar functionality to a conventional DeFi lending and lending platform, but often also have some unique features associated with the decentralized nature of the product. Here is a brief description of such features.
External Wallet
To take advantage of the capabilities of the DeFi lending platform, the user must connect their crypto wallet, which will be responsible for storing the user's money.
For example, the Compound DeFi lending platform supports Metamask, Ledger, WalletConnect, and Coinbase Wallet crypto wallets. Aave DeFi lending platform offers more features – 30 crypto wallets are now available.
Instant Loans
This type of unsecured DeFi lending platform development has gained massive adoption in DeFi thanks to the Aave credit platform. They were the first to provide quick unsecured loans denominated in cryptocurrencies. These loans are often offered using a smart contract for a certain time period with restrictions (no selling or moving coins until the loan is returned), and they are immediately terminated if the borrower is unable to make their payments.
And although term loans are quite an innovative and controversial concept, individuals have already appreciated their advantages. The ability to get a loan almost instantly without collateral gives traders more options to earn on informational occasions, price discrepancies on different exchanges, etc.
Investment Rewards
In order to motivate people to provide their funds to the credit platform to borrow from other people, such platforms provide all investors with a reward in the form of a percentage of the invested funds. And this percentage is usually two to three times higher than the interest on deposits in the US, Canada, the UK and EU countries. At the same time, the risks are lower than when investing in bank deposits from developing countries.
Switching Speed
The rapid rate change provides borrowers with the ability to select between stable and tied interest rates and thus protect themselves from sudden fluctuations in the cryptocurrency markets, which are still very volatile. On the Aave credit DeFi platform, this custom option's implementation is demonstrated.
Fiat Gateway
This feature allows people to buy crypto assets for fiat currency, greatly simplifying the process of adapting crypto newcomers to this market. In addition, the fiat gateway also makes it easy for credit platforms to integrate with third-party tools and applications outside of the cryptocurrency industry.
Automation
In the DeFi sector, the most routine business processes are automated and standardized through smart contracts (a smart contract). Therefore, DeFi Development Services loan investors may not worry about their payouts and/or dividends being frozen, stolen, or transferred to someone by mistake. Additionally, automation makes it possible for you to create a system for the automated payment of taxes and other necessary fees and payments (if required by local laws).
