The crypto market has evolved into a $2.63 trillion dollar industry. Numerous innovations have emerged within the sector during the last few decades. The decentralized finance (DeFi) space is one of the most recent inventions.
DeFi is one of the fastest expanding segments within the blockchain industry. It provides a plethora of services to cryptocurrency lovers, and because of its significance, we shall walk you through a critical component of DeFi: lending.
What is DeFi, and why is it important?
DeFi is a simplified form of Decentralized finance. It is a blockchain-based financial ecosystem. DeFi is different from traditional banking systems because it is decentralized and works without a middleman or a central body.
Rather, DeFi uses a peer-to-peer connection to create decentralized applications that enable users to interact and control their assets no matter where they are or what condition they are in. DeFi’s goal is to ensure that people all across the globe have access to open-source, visible, and anonymous banking systems.
The decentralized finance ecosystem is built on smart contracts. Smart contracts are self-executing and don’t require a third-party intermediary. DeFi started on the Ethereum network. Hence, it is not a surprise that most of the DeFi protocols are built on the Ethereum blockchain. That’s why Cardano based DEX, Ravendex is taking the lead to build a lending protocol for all lovers of Cardano blockchain.
What is the Ravendex Lending Protocol?
Ravendex lending protocol will be an open-source lending protocol and it is one of the earliest DEX built on the Cardano blockchain. It is a non-custodial liquidity protocol that allows investors to earn interest on their assets. Lenders can deposit cryptocurrencies in a pool and receive our native token, $RAVE. According to demand and supply, Ravendex modifies interest rates algorithmically. It means that the higher the amount of $RAVE held by the user, the higher the interest rate.
How does Ravendex lending protocol work?
The Ravendex platform seeks to provide trustless cryptocurrency loans by permitting holders to invest their coins in Ravendex for lending purposes.
A borrower can take out a loan on our platform and this enables the lender to collect interest if the loan is repaid. The lending procedure is finished without the use of middlemen from beginning to end.
A coin owner uses a Cardano smart contract to send the tokens they want to lend into a pool. When coins are submitted to the smart contract, they become accessible for borrowing by other users. After that, the smart contract generates tokens that represents his share in the Lending pool which are distributed to the lender automatically. In addition to the underlying funds that were given to the smart contract, the tokens can be retrieved at a later time.
Almost all loans made with native tokens are backed by collateral. Users who want to borrow money will be required to offer a guarantee. The guarantee in the DeFi space, unlike the conventional banking system, is in the form of crypto assets that are valued more than the loan amount.
In theory, this approach may appear ridiculous because the borrower may earn the funds by selling their assets in the first place. DeFi borrowing, on the other hand, makes sense for a range of factors.
For beginners, users may need funds to cover unexpected bills and do not intend to sell their assets since they feel the assets will appreciate in value over time. Users can also avoid or postpone paying capital gains taxes on their digital assets by borrowing money through Ravendex’s lending system. Individuals can also employ Ravendex funds to improve their leverage on certain trading activities.
More about Ravendex Lending Protocol
Ravendex users can be able to enjoy the following:
Native Assets Lending Protocol
Users can link or connect their wallets, deposit assets, and earn interest in a decentralized manner using the yoroi nightly extension.
Peer To Pool, Pool To Peer Lending Protocol (P2P)
Ravendex uses a novel pooled lending contract to make crypto loans and lending more accessible. Users can use the Ravendex platform to borrow assets and pay them back with interest at a later date.
What more can be done on Ravendex?
Ravendex is beneficial to developers and project owners that want to move their native tokens from Ethereum to the Cardano blockchain in order to benefit from lower fees.
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