Bitcoin Forum

In my opinion, at present, lending protocol such as Compound only  allows  highly liquid assets, such as ETH, to be mortgaged. In fact, this kind of collateral can also be borrowed by others as liquidity assets. For example, people who deposit BAT can borrow the ETH deposited by the others, or even someone may deposit usdc to borrow ETH for special purposes. Therefore, the liquidity of compound is super abundant, there is no "waste" assets, and the internal efficiency of the system is very high, so it is difficult for compound to add low liquidity assets as collateral.

High liquidity assets can be realized at any time, or even used as the base currency to purchase other assets. Therefore, using this kind of asset as collateral reduces the investor's own liquidity (because the pledge rate is generally 70%+x%, which is obviously smaller than the original asset). Therefore, this kind of investor seems not the real liquidity demander, but a arbitrageur who makes circular pledge based on token price rising logic. For the whole market,  the overall liquidity has shrunk and the risk has increased, which is an unhealthy mode in fact.

The significance of Defi lending service should be an advanced liquidity system, which can create maximum value by finding and providing liquidity to those who need liquidity.

Long term -- the possibility of pledge of high quality assets in reality: AAVE, makerdao are trying in this way.
Medium term -- the possibility of changing the mechanism of over collateralized.
Short term -- increase the possibility of more currency launching on lending platform as collaterals.

Cheese bank will release how we solve these problems, come faster than AAVE and try to do better than compound. Please wait and see~

I think the whole defi scenario is at the very start and in future we will see more and more products.
Defi projects have to come up with easy and user friendly platforms for everyone to use.
More and more banking, financial and savings products will also bring more people to the defi market .
I think there is a long way for defi projects to go from here and at the same time there is huge potential as well.

I think most of the DEFI projects are solely concentrating on staking ,locking up the coins create a supply crunch and pushing the price high. I am not saying all projects are doing this but projects doing this definitely need to evolve in the long term.

What are the different way lenders use funds?  In order to get low slippage stablecoin trading like CRV/Curve.. but what about other platforms?

They do, because you know why?

It retains the value and the market cap. if there's a locked in period for most assets, the investors can't just remove it out of the economy of that token.

It's a brilliant move for those developers but them, they are free to get in and out anytime they want to.

CRV's supply is pretty high and they're working to bring in new mechanisms to drop inflation.  It's 2M per day, 776,000 to users.. it's a lot.

They just brought in buying up CRV from the open market with admin fees from their LPs though, and that's chewing up 60 - 70% of daily inflation right now.  It started a few days back.

Rethink what you know about Defi its still a baby  ::)

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