Xu, Jiahua;
Vadgama, Nikhil;
(2022)
From Banks to DeFi: the Evolution of the Lending Market.
Enabling the Internet of Value. Future of Business and Finance. Springer, Cham
pp. 53-66.
10.1007/978-3-030-78184-2_6.
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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.
| Type: | Article |
|---|---|
| Title: | From Banks to DeFi: the Evolution of the Lending Market |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1007/978-3-030-78184-2_6 |
| Publisher version: | http://dx.doi.org/10.1007/978-3-030-78184-2_6 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Dept of Computer Science |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10162024 |
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