Blog

Blockchain technology

Benefit your users by launching a DeFi lending and borrowing platform

Pinterest LinkedIn Tumblr
This image has an empty alt attribute; its file name is Ethereum-Token-Development-Services-6-1024x576.png

Every DeFi lending and borrowing platform operates without the intervention of third parties.

In these platforms, smart contacts enable the investors to lend or save their funds and allow borrowers to receive funds from lenders for suitable interest rates.

What is a DeFi Lending And Borrowing Platform?

A decentralized Finance (DeFi) lending and borrowing platform remove all the hurdles faced by traditional banking for smooth and effective operations.

It allows investors to deposit their currency or lend loans to another user in return for an equivalent amount of interest in a very decentralized application. These platforms are integrated with all the DeFi protocols like DApps and smart contracts.

Special features Of A DeFi lending And Borrowing Platform With Protocols:

Transparency and quicker operations:

Blockchain records every transaction and can be verified by users on the network. This transparency level facilities data analysis and enables verified access to all users on the network. Smart contracts make operations faster by preventing the need for intermediates.

Flash Loans:

Flash Loans are uncollateralized loan feature in DeFi which allows users to borrow instantly and seamlessly without collateral given that the liquidity is returned to the pool within a single transaction block.

Rate switch:

It is a distinguishing feature that allows users to switch between two interest rates such as stable and variable in order to receive the best interest rate for the given amount because of market fluctuations.

Permissionless:

DeFi lending and borrowing protocols allow anyone with a crypto wallet to access Defi applications built on Blockchain, irrespective of their location and without any minimum amount of funds.

Crypto billfold:

A crypto billfold is integrated into the platform which allows users to hold and access their personal crypto keys.

Unique Collaterals:

DeFi lending and borrowing platforms support a wide range of collateral types such as DAI, ETH, BAT, LINK, MANA, MKR, SNX, USDT, USDC, TUSD, USDT, USD, BUSD, etc.

Investment Rewards:

DeFi platforms enable lenders to earn some extra rewards in addition to receiving interest for the disbursed amount.

Programmability and borrowing Interoperability:

Smart contracts automatically govern the operations and lead to the creation of new digital assets while interconnected software stack makes sure that Defi protocols and applications integrate and adaptable with one another.

Recapitalization:

DeFi disposal and borrowing platform development enables its users to create a balance between equity and debt.

Workflow Of A DeFi disposal and borrowing Platform:

Defi lending and borrowing platforms allow users to lend their crypto/assets to others and earn interest for the disbursed amount without any intervention from third parties.

In DeFi, anyone can be a lender. The process is carried out through lending pools. As DeFi depends on the blockchain, the lenders earn high returns because of its transparent nature wherever risks are often assessed clearly.

By using smart contracts, lenders can pool their assets and distribute them to borrowers. It is recommended that lenders should identify the best interest type and the same goes for borrowers, as each pool have their own approach on how to borrow.

In DeFi, Collateral functions in the same way as it does for banks but the difference is that the system doesn’t involve any physical property used as collateral. A borrower should offer something more valuable than the borrowing amount to get the loan. Any crypto token can be used to exchange borrowed cryptocurrency. A borrower needs to deposit the price of one bitcoin in DAI, to borrow a bitcoin.

Because of fluctuations of crypto assets, a case may arise when the cost of collateral drops below the loan amount. To deal with this, Platforms like MakerDAO requires users to collateralize their loans at a minimum of 150% of the loan amount.

Why Choose Brugu for developing your DeFi lending and borrowing platform?

Brugu, a leading DeFi Development Company, has 10+ years of expertise in blockchain technology.

Our pool of blockchain architects and DeFi developers is certain to deliver quality DeFi development services to launch your DeFi lending and borrowing platform development.

Brugu tens to integrate your DeFi platform with all the vital functions and features like charge loan origination fees, late fees, bounced payment fees, top-performing rate of returns, and many lending.

Write A Comment