From Banks to DeFi: the Evolution of the Lending Market

Jiahua Xu () and Nikhil Vadgama ()
Additional contact information
Jiahua Xu: University College London, Centre for Blockchain Technologies
Nikhil Vadgama: University College London, Centre for Blockchain Technologies

A chapter in Enabling the Internet of Value, 2022, pp 53-66 from Springer

Abstract: Abstract The Internet of Value (IoV) with its distributed ledger technology (DLT) underpinning has created new forms of lending markets. As an integral part of the decentralised finance (DeFi) ecosystem, lending protocols are gaining tremendous traction, holding an aggregate liquidity supply of over $40 billion at the time of writing. In this paper, we enumerate the challenges of traditional money markets led by banks and lending platforms and present advantageous characteristics of DeFi lending protocols that might help resolve deep-rooted issues in the conventional lending environment. With the examples of Maker, Compound and Aave, we describe in detail the mechanism of DeFi lending protocols. We discuss the persisting reliance of DeFi lending on the traditional financial system and conclude with the outlook of the lending market in the IoV era.

Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:fuobcp:978-3-030-78184-2_6

Ordering information: This item can be ordered from
http://www.springer.com/9783030781842

DOI: 10.1007/978-3-030-78184-2_6

Access Statistics for this chapter

More chapters in Future of Business and Finance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().