Pentacle

What

The simple acts of Lending and Borrowing are prominent financial primitives that form the basis of many more complex financial products. Just as there are DEXes operated by Automated Market Makers that allow people to swap their coins seamlessly with each other, there are numerous lending platforms in DeFi.

Why

As a lender, you can provide liquidity (deposit coins to borrow) to the protocol in order to earn interest on your deposits from borrowers, and take out a loan in the form of some other coin using your deposits as collateral

Risk

When borrowing coins against deposited collateral, it is important to keep an eye on our health ratio; if the value of our collateral drops too much in proportion to our loan, the system may forcibly liquidate our funds lest we deposit more or pay back what we have borrowed. While the interest rates on deposits and borrows are decided algorithmically in a transparent manner, they typically are not stable but rather fluctuate depending on supply and demand. In some cases, you may not be able to retreive your deposit in full — if a coin is over-borrowed relative the liquidity deposited on the platform, for example. It is important to read the documentation of the platform we intend to use, as the risks involved can vary greatly depending on the exact implementation.

Reward

Lending protocols in DeFi let people take out loans from each other seamlessly and transparently; the interest rates and risk parameters are decided by the algorithms coded into the decentralised applications — like a bank or a pawn shop, but friendlier. DeFi protocols often reward their users (borrowers and lenders both, in this case) with native tokens, typically used to govern future changes to the protocol.

Related projects

Euler Finance

### What Euler is a non-custodial permissionless protocol on Ethereum that allows users to lend and borrow almost any crypto asset. Euler helps users to earn interest on their crypto assets or hedge against volatile markets without the need for a trusted third-party. ### Why? Euler introduces a number of new features in DeFi, including permissionless lending markets, protected collateral, reactive interest rates, per-second compounding interests and feeless flash loans. #### Permisionless listing Euler lets its users determine which assets are listed. Any asset that has a WETH pair on Uniswap v3 can be added as a lending market on Euler. #### Protected Collateral On Compound and Aave, collateral deposited to the protocol is always made available for lending. On the other hand, Euler allows collateral to be deposited, but not made available for lending. This collateral is 'protected'. It doesn't earn interest, but is free from the risks of borrowers defaulting, can always be withdrawn instantly, and helps protect against borrowers using tokens to influence governance decisions. #### Reactive interest rates Euler uses control theory to autonomously change the interest rates towards a level that maximises utilisation of assets in the protocol. These reactive interest rates adapt to market conditions for the asset in real-time without the need for ongoing governance intervention. #### Compound Interest Compound interest is accrued on Euler each second. This is different from other lending protocols, where interest is typically accrued every block. Earning interest per-second is generally expected to perform more predictably in the long-run, even if upgrades to Ethereum lead to changes in the average time between blocks. #### Feeless Flash Loans Euler only charges fees according to the time value of money, and from the blockchain's perspective flash loans are held for a duration of 0 seconds. Thus, they are entirely free on Euler (ignoring gas costs).

JPEG'd

JPG is a platform focused on curating NFT exhibitions, enabling users to create or participate in co-curating NFT collections known as Canons. It positions itself as a curation layer for Web3, emphasizing community engagement in discovering and governing the Canons, which range across various themes and artistic expressions.

BendDAO

BendDAO is the first decentralized peer-to-pool based NFT liquidity protocol.

LlamaLend

Deposit NFTs and borrow ETH for small illiquid NFT collections that can't get into the main NFT lending markets.

Scream

SCREAM is a highly-scalable decentralised lending protocol built and powered by the Fantom Blockchain.

dAMM finance

Lend any token any time. Alt-coin liquidity for borrowers and lenders. Trade what you want, when you want.

Compound

Compound is a decentralized autonomous interest rate protocol. It allows people to lend and borrow their cryptocurrencies, and establishes money markets by algorithmically setting interest rates based on supply and demand of various assets. Its native token is COMP, allowing holders to propose and vote on changes made to the protocol.

B.Protocol

B.Protocol is a backstop protocol which BPRO holders govern. Users of the protocol have access to all the benefits of MakerDAO and Compound (soon Aave), with the additional benefit of splitting liquidation proceeds according to proportional usage of the protocol.

Goldfinch

Astaria

### What Astaria is an on-chain NFT lending platform that aims to provide a seamless experience for the native DeFi user. The Astaria protocol allows Strategists to publish loan terms through Vaults, which can accept capital from liquidity providers to be lent to borrowers. Competition between Strategists ensures that borrowers have access to competitive market rates and terms.

Canto

Canto is a permissionless general-purpose blockchain running the Ethereum Virtual Machine (EVM) At launch, Canto provides Tendermint consensus secured by Canto validator nodes and an EVM execution layer via Cosmos SDK in addition to core financial primitives designed to support the Free Public Infrastructure (FPI)

Maker

Maker is a decentralized lending platform that allows people to lock in their crypto collateral in exchange for DAI, a decentralized stablecoin whose price target is pegged to $1. The protocol's native token used for governance is MKR.

AAVE

Aave is a decentralized money market protocol where people can lend out their assets to earn interest, or borrow various cryptocurrencies against their deposited collateral. The protocol has a native token AAVE, which is used by its community to make collective decisions on the direction of the protocol.

Alchemix

Alchemix Finance is a DeFi protocol that allows people to create yield-backed synthetic tokens in exchange for providing their cryptocurrencies as collateral. Visitors can for example deposit their DAI into the protocol, and receive (a lesser amount of) alUSD tokens, equally pegged to $1. The protocol uses the collateral provided by its visitors to collect yield and dynamically repay the depositors' debt, essentially giving its users an immediate claim on the future yield of their tokens. The protocols native token is ALCX, used to govern the development and directional decisions of Alchemix.