Decentralized Finance or DeFi is the latest innovation in the crypto world. By building on the advantages of blockchain technology, DeFi has transformed the borrowing and lending process. DeFi crypto lending platform development eliminates the middlemen and simplifies fund transfer between stakeholders.
Before we dive into the benefits of DeFi lending and borrowing, it is better to examine the current state of affairs in the financing sector. In a conventional setting, any individual seeking a loan has to overcome a lot of hurdles even before they begin. For example, they might not have a good credit score that qualifies them to access basic financial services. Even those who have the desired credit score are burdened with further documentation and interaction with third-party, which increases the cost, time, and efforts. It should also be noted that fiat-backed institutions – generally traditional financial institutions are prone to manipulation. Unfortunately, the losses incurred from this manipulation are eventually borne by the common man.
Cryptocurrency and DeFi lending platforms make the borrowing/lending process simple and optimized. This is because decentralized finance products offer the benefits of their underlying technology, blockchain. Therefore, all the transactions are recorded in a secure, transparent, and immutable manner. This not only helps track fund management but also identifies unauthenticated participants and denies their access to the platform. The users also have full control over their assets, which is not possible in a traditional lending process.
In a nutshell, the DeFi lending and borrowing protocols are one step above conventional lending practices. The latter is a manual process and still requires a trusted intermediary to act as an escrow.
However, DeFi offerings make use of smart contracts to streamline the whole process. This initiative achieves two factors- 1) it eliminates the need for middlemen, and 2) ensures fast transactions that are immune to hack.
The working process of DeFi lending and borrowing is somehow similar to the common bank. Here, individuals can lend their cryptocurrencies as a loan and earn interest whenever someone takes a loan from them on the platform. The terms of borrowing and lending of cryptos are coded in the smart contracts.
Taking a loan on a DeFi lending platform is extremely easy. Similar to the bank loan, the DeFi lending process requires the borrowers to deposit collateral. In such a case, the collateral accepted is crypto assets such as Bitcoin, Ethereum, Ripple, and more. The borrowers receive funds in stable coins, such as USDT. Individuals taking a loan from DeFi should ensure that they pay back the loan within the stipulated period.
DeFi opens the door to all-inclusive financial systems, one that does not exploit or harm users. If you are planning for DeFi crypto lending platform development, Antier Solutions can help.
We offer end-to-end DeFi development services including, DeFi token solution, DeFi exchange development, DeFi wallet development, Decentralized crypto banking, and more. Our blockchain engineers have rich experience and knowledge in building secure DeFi platforms underpinned by market-leading features.
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