Dive into decentralized finance: the 5 best lending platforms

With decentralized exchanges or DEX, people can buy and sell cryptocurrencies directly with each other, without the interference of any middleman. In order to facilitate this crypto activity, people connect their crypto wallets to a DEX, choose their crypto trading pair of choice, enter the amount and trade their digital assets generating profits.

In the first 3 editions of “DeFi Deep Dive”, we discovered “Valuing DeFi Blockchains”, Top 5 DeFi Assets and Top 5 Decentralized Exchanges. In this edition, let’s discuss the top five lending platforms. These are:

  1. Aave
  2. Compound
  3. Anchor
  4. Abracadabra
  5. Venus

Aave (AAVE) is 2 things – a decentralized finance protocol as well as a crypto token. As a protocol, it enables crypto lending and borrowing. Lenders deposit digital assets into liquidity pools. Borrowers post crypto collateral and take out “flash loans” using the liquidity pools. As a token, it offers holders reduced fees and also serves as a governance token by giving holders a vote in protocol development.

  • Total value locked: $14.13 billion
  • MCap/TVL ratio: 0.16

2 compound compound_lending_platform_defi

Compound (COMP) allows users to deposit crypto into pools and earn interest. Borrowers take out secured loans from compound pools by posting collateral. If this guarantee falls below a threshold, the loan is automatically liquidated.

  • Total value locked: $10 billion
  • MCap/TVL ratio: 0.12

three anchors anc_lending_protocol_defi

According to its white paper, Anchor aims to become “the gold standard for passive income on the blockchain”. Anchor is a Terra-based savings protocol that offers yield powered by block rewards from leading Proof-of-Stake blockchains. ANC is the token of Anchor, which offers holders governance rights and a share of protocol revenue.

  • Total value locked: $6.2 billion
  • MCap/TVL ratio: 0.1

4 abracadabra abracadabra_lending_protocol_defi

Abracadabra is a cross-chain stablecoin lending protocol. It allows interest-bearing tokens, which users obtain by staking in vaults, to be used as collateral to mint Magic Internet Money (M.I.M.) which are USD pegged stablecoins.

SPELL is Abracadabra’s governance token that grants holders voting rights and a share of the fees generated by the protocol.

  • Total value locked: $4.8 billion
  • MCap/TVL ratio: 0.22

5 venus venus_lending_protocol_defi

Venus is an algorithmic money market based on Binance Smart Chain and a synthetic stablecoin protocol.

It allows users to borrow directly against collateral. It also allows users to hit GO stablecoins (which are pegged to USD) by posting at least 200% collateral. XVS the tokens are governance tokens of the Venus protocol.

  • Total value locked: $2 billion
  • MCap/TVL ratio: 0.1

To note:

  • Figures are as of December 17, 2021 and are rounded.
  • Sources: DeFi Llama, CoinMarketCap, Messari, Future Money Wallet.
  • TVL = total value locked
  • Mcap = market capitalization

Rohas Nagpal is the author of the Future Money Playbook and chief blockchain architect of the Wrapped Asset Project. He is also a retired amateur boxer and hacker. You can follow him on LinkedIn.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting Founder Alok Jain on Orbital, Gadgets 360 Podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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