Combining DeFi with realistic risk control, non-full mortgage agreements are sought after
Text | Edited by Jiang Haibo | Produced by Tong | PANews
Text | Edited by Jiang Haibo | Produced by Tong | PANewsBecause of the transparent, open, and non-tamperable characteristics of the blockchain, smart contracts can realize many functions that are difficult to achieve in traditional finance. The oldest DeFi projects such as Compound and Aave have completed the accumulation of users and funds through liquidity mining.。
As of July 13, the current total deposits in Aave have reached 16.5 billion US dollars, and the total deposits in Compound are also 13 billion US dollars
Deposits in Compound and Aave can obtain the corresponding cToken and aToken, and you can directly use cToken and aToken to mortgage loans. Corresponding to traditional finance, this is equivalent to using bank deposit certificates for loans, but the scope of use of bank deposit certificates in traditional finance is limited.The blockchain advocates "code is law", which brings us convenience while sacrificing some functions. in lending,. Pure DeFi innovation is becoming more and more difficult, and more and more applications are combined with traditional methods, including non-full mortgages. Some representative under-collateralized protocols will be introduced below.
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Maple: A rookie in under-mortgage lending, introducing an agent mechanismMaple is a decentralized enterprise credit marketplace that benefits all parties involved by providing undercollateralized loans. Liquidity providers can deposit principal into Maple and lend to high-quality cryptocurrency institutions in need of funds through a fund pool with specific strategies.。
Institutions can obtain under-collateralized loans through their reputation, without worrying about the risk of liquidation, which greatly improves the utilization rate of fundsMaple works similarly to fund management protocols like Enzyme
, Agents (Pool Delegates) create and actively manage fund pools, and decide which institutions to lend funds to; Liquidity Providers (Liquidity Providers) provide liquidity and receive deposits and governance token rewards. In addition, there are pledgers (Stakers) who provide insurance services, and borrowers (Borrowers) who can obtain loans after reaching an agreement with the agent. Maple Token (MPL) plays an important role in protocol management, such as participating in governance, sharing revenue, providing insurance, liquidation, etc., which can determine which fund pools can be included in the whitelist through governance. In order to understand their respective roles in the non-full mortgage agreement, the following will introduce the division of labor of several types of roles in Maple in detail.
agent
Maple creates liquidity pools around agents' strategies and provides lending services. Agents are generally reliable asset managers who need to be approved by Maple’s governance, and can only launch the corresponding fund pool after being whitelisted. Agents originate and manage liquidity pools, each developing their own investment strategies and underwriting processes to identify creditworthy borrowers.
The main tasks of the agent include: creating and managing the liquidity pool, evaluating new borrowers, agreeing terms and pool loans, managing the balance in the liquidity pool, and assisting in special liquidation. Agents also benefit from this, increasing their AUM while earning performance fees and sharing the proceeds from setup fees (1%) and ongoing fees.
liquidity provider
Liquidity Providers provide liquidity to the fund pool in order to have the opportunity to earn fixed interest and MPL mining rewards. Liquidity providers do not need to participate in the management of the liquidity pool. The agent will announce the strategy of the corresponding fund pool, and only needs to choose the corresponding fund pool to participate.
Unlike decentralized lending, Maple provides fixed-term and fixed-rate loans, so there are restrictions on the redemption of funds by liquidity providers. The current staking period is 180 days, which is known as the pre-cooling period, followed by a 10-day cooling period before redemption of the principal is allowed. The interest income and MPL token rewards of liquidity providers can be withdrawn at any time and reinvested.
Borrower
Maple can provide borrowers with efficient and transparent on-chain financing solutions. Borrowers use their reputation to borrow under-collateralized loans without worrying about the risks of liquidation and margin calls. Borrowers include hedge funds, proprietary traders, market makers, exchanges, centralized lenders, cryptocurrency miners, and more.
Unlike the anonymous borrowing that is only done on the chain, the borrowing in Maple will not only conduct due diligence on the borrower, but also sign the corresponding legal documents. If the borrower defaults, he will not only suffer the loss of reputation, but also bear legal responsibility.
pledger
Holders of MPL tokens have the opportunity to provide default insurance for pledged tokens in the liquidity pool to obtain interest income from the liquidity pool.
Stakers can provide liquidity on Balancer with MPL and USDC at a ratio of 1:1, and obtain Balancer's liquidity token (BPT), and pledge BPT to the corresponding fund pool to obtain continuous interest income.
Like the liquidity provider of the stable currency in Maple, the BPT pledged to the fund pool cannot be withdrawn at any time. There is a 180-day pre-cooling period and a 10-day cooling-off period.It can be seen that Maple creates certain strategies through agents, raises funds from liquidity providers in a decentralized manner, and then lends them to institutional investors at a lower mortgage rate.Rely on the professional skills of the agent. Unlike DeFi protocols that only run on smart contracts,Maple also needs to sign a legal agreement with the borrower
, which basically represents the commonality of non-full mortgages.Currently there are only two fund pools in Maple, managed by Orthogonal Trading and Maven 11 respectively. There are a total of 58.7 million USDC funds in the two fund pools. The Maven 11 - USDC 01 pool has just been established, and Orthogonal Trading has lent 25 million USDC.. The minimum collateral ratio for both is 0, and the agent evaluates the reputation of the borrower based on how to manage leverage, liquidity risk, operational risk control, management experience, balance sheet strength, and financial performance.
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TrueFi: Veteran stablecoin team with simple governanceTrueFi was launched by the TUSD team (TrustToken) in November 2020,Same fixed term and fixed rate loans. TrueFi allows borrowers to raise funds without collateral, while fund providers can also obtain higher returns.The division of labor of each role in TrueFi is clear
, the lender deposits stablecoins and other assets into the lending pool to obtain income; the borrower initiates a loan application and withdraws the loan after credit approval; TRU pledgers vote to decide whether to lend the funds to the corresponding borrower applicant.TrueFi V3 develops a credit scoring model
, can give an objective score, the full score is 255 points, and the basic score is 0 points. The score refers to indicators such as company background, repayment history, operating and transaction history, assets under management, and more. All pledgers of TRU tokens can participate in deciding whether to approve a certain loan, and no other roles are required to formulate strategies. The approval of the vote requires a support rate of more than 80%, and the number of TRU tokens participating in the vote is not less than 15 million.TrueFi also has a legal framework
, Borrowers will also face legal action when they refuse to repay despite the impact of reputation.
At present, the total number of loans initiated in TrueFi is about 220 million US dollars, of which 119 million US dollars have been repaid, the average loan amount is about 5.11 million US dollars, and the average loan cycle is 52 days, creating a total of 1.73 million US dollars in interest income.As you can see from the borrowing page, TrueFi’s borrowers include. Among them, Alameda Research borrowed more times, a total of 8 loans have been repaid, and another loan is under review.
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Judging from the current situation, both Maple and TrueFi are targeting the institutional market. Institutions have more abundant assets, less risk of default, and a large number of loans. Therefore, the value of due diligence on these borrowing institutions is higher.
andandGoldfinch set its sights on developing countries, wanting to solve the lending problem of long-tail users
. Banks don’t know the borrowers, and underwriting fees are high, potentially cutting off long-tail users. For example, a user in Bogota wanted to finance the purchase of motorcycles for his foot deliveries, but had no capital and banks were reluctant to lend.By decentralizing the underwriting process, Goldfinch uses a decentralized approach to allow anyone to lend in ways that current banks cannot provide. There are countless people in the world who can identify and evaluate new sources of credit, if the overhead of banks could be eliminated, andLet the people of the world collectively judge
Loans from Goldfinch do not require any collateral. As the project develops, Goldfinch will build a decentralized network to allow everyone to submit and evaluate loan applications, supporting more and more long-tail lenders until everyone can lend through Goldfinch funds.
can be seen,can be seen,，In deciding who to lend to, Maple is only determined by the agent, and TrueFi is determined by the vote of TRU token holdersGoldfinch does not currently plan to issue governance tokens, so as to allow as many people as possible to participate in decision-making
The founder of Goldfinch is from Coinbase, and has also received investment from Coinbase, a16z, etc. As of July 1, $4.5 million in loans had been extended to countries including India, Indonesia, Mexico, Nigeria and Vietnam.
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yborrow.finance: relying on other people's authorized guarantee
yborrow is a credit authorization product released by Aave. After depositing in Aave, you will get the corresponding aToken, which can be used as collateral to lend another asset. But some users may not borrow money, but just deposit funds in it to earn interest.This credit authorization product created by Aave allows depositors to authorize their unused aTokens to others, allowing others to obtain loans without collateral
In Aave's first credit authorization loan, decentralized exchange DeversiFi received a loan. DeversiFi and Karen also signed the loan agreement through OpenLaw, an automated legal agreement that embeds Ethereum-based smart contracts into legal agreements to reduce ambiguity caused by legal documents.
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Wing: low personal quotaWing is a credit-based cross-chain DeFi platform, and its Inclusive Pool can carry out credit loans. Users need to complete KYC verification first to obtain a loan limit.。
Currently, the Inclusive Pool contains three cross-chain assets: pDAI, pUSDC, and pUSDT. The limit of each asset is 500,000 USD, but the total deposit of each asset is only 50,000 USD at present, and no one is lending assets from it.
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Advantages and disadvantages of under-secured loans
Insufficient mortgage lending capital efficiency is high, there is no risk of liquidation, and the mortgage rate is as low as 0, while MakerDAO, which completely relies on the decentralized operation of the chain, requires a mortgage rate of more than 150%, but still faces liquidation risks.
On-chain fundraising and loans are combined with off-chain due diligence and agreement signing. If the borrower defaults, they can protect their rights through legal means.
Lending can be combined with insurance, such as the pledger in Maple, which may develop a new direction.
There needs to be a corresponding evaluation system. The agreement may build its own evaluation system, or it may hand over the funds to special personnel for management.
The lender may face the risk of loss of principal, such as the possibility that the borrower may eventually go bankrupt due to poor management.
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summary
summaryUnder-mortgage loan is a loan method with higher capital utilization rate, no liquidation risk, and more convenient than over-mortgageRisks need to be controlled, and people with better reputations are more likely to borrow funds.
Existing under-mortgage lending agreements usually sign a legal agreement with the borrower, and legal rights can be defended in the event of asset loss, which is the fusion of DeFi and reality.The current under-collateralized borrowers are mainly for institutional investors
