DeFi Lending Platforms Comparision Reveals the Most Undervalued One

DeFi Lending Platforms Comparision Reveals the Most Undervalued One

By Li_KungFu | BitGuy | 9 Mar 2021


DeFi is a nascent industry and with that, it moves incredibly fast. So fast, in fact, that 2/3-year-old platforms can become obsolete, creating space for newcomers to innovate upon their ideas. This rule applies to every niche within DeFi and we’re watching it play out now.

Let's examine DeFi lending platforms in detail:

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Aave and Compound are the pioneers of DeFi lending, allowing for permissionless ERC-20 pooling for decentralized lending and borrowing. 

Celsius, on the other hand, sparks a lot of controversy in DeFi discussions about its decentralization. It's not as decentralized as Aave or Compound, there is some controversy, but per PR Newswire they are on their way to being decentralized.

Then there is a total newcomer, Yield Credit, which is the pioneer of its own DeFi lending niche – Peer-to-Peer (P2P) lending, which is very popular in TradFi.

In the following comparison piece, we’ll dive into the state of these DeFi Lending projects, look at some stats, and define their pros and cons. 

Now, let’s get to it!

1. AAVE ($AAVE)

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Aave website homepage

MCap: $5,044,827,762
# of tokens available: 24

Aave is one of the top 3 DeFi lending platforms with more than $5.2B total value locked (TVL). The Aave platform serves both retail and institutional clients, providing users with a decentralized backend infrastructure for lending and borrowing. Aave currently supports lending and borrowing for 24 crypto-assets including 7 stablecoins and a variety of “blue-chip” DeFi assets. 

Pros

  • DeFi lending pioneer
  • Extensive collateral options of 24 tokens
  • Innovative DeFi products (Flash Loans)
  • High liquidity
  • Consistently competitive rates
  • Highly composable DeFi building block

Cons

  • Rates are dynamic and typically trend towards 0%
  • The platform is more complex to understand (there is a learning curve)

2. Compound ($COMP)

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Compound website homepage

MCap: $2,025,720,514
# of tokens available: 9

Compound, like Aave, is one of the top 3 DeFi lending platforms with more than $5.2B total value locked (TVL). Compound is one of the most trusted and secure DeFi protocols and is backed by multiple world-class investors like Coinbase. The platform enables anyone to supply crypto-assets to Compound’s liquidity pool and immediately begin earning continuously-compounding interest. Compound currently supports lending and borrowing for 9 crypto-assets.

Pros

  • Easy to use platform
  • High liquidity
  • Highly composable DeFi building block
  • Highly secure, strong backing

Cons

  • Rates are dynamic and typically trend towards 0% (example. ETH)
  • Limited collateral options

3. Celsius ($CEL)

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Celsius website homepage

MCap: $2,024,067,858
# of tokens available: 34

Celsius is an industry-leading cryptocurrency interest income platform with more than $600M in assets. Celcius offers a centralized platform for users to deposit a variety of crypto-assets to receive payments. The platform currently offers over 40 interest-bearing assets, with yields as high as 18.5%. Celsius is now moving towards a more decentralized product offering by using Chainlink's Price Reference Data to calculate interest payment amounts to users.

Pros

  • 30+ collateral options
  • Zero fees + No penalties
  • High interests + Bonus rates
  • No time lockup 

Cons

  • Centralized platform
  • Rates fluctuate and are not guaranteed
  • KYC required
  • Mobile App only
  • Country restrictions
  • Not a composable DeFi building block

4. Yield ($YLD)

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Yield Credit website homepage

MCap: $42,854,714
# of tokens available: 295,682 YLD (47%)

Yield Credit is a unique Peer-to-Peer (P2P) DeFi lending platform that supports incentivized lending and borrowing of any ERC-20 token. The platform is unique to DeFi and differs from Aave and Compound in that it’s P2P (not pooled); incentivizes not only lending (as per usual) but borrowing too with $YLD rewards; and supports the lending and borrowing of any ERC-20 token. Yield Credit just went live and it's available for anyone to use here

Pros

  • Individualized loans
  • Guaranteed interest rates
  • Borrowers earn $YLD for repaying loans
  • 100% of fees are used to burn $YLD
  • 28 collateral options

Cons

  • The current maximum loan size is $50K
  • New platform with limited listings
  • Due to current eth gas fees, not suitable for small loans

Conclusion

While $AAVE and $COMP will probably remain kings of DeFi lending for a long time, we shouldn't underestimate the importance of laser-focused platforms like $YLD that offer tailored solutions unlike any other in this space. P2P in Tradfi is huge. It’s going to be huge in DeFi too. 

Cheers guys. Catch ya in the next one.

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