Top 5 Bleeding Edge Lending Protocols You Need To Check Out

DeFi lending protocols use smart contracts to connect lenders and borrowers directly, eliminating the intermediaries typically involved in taking out a loan. This reduces fees while improving transparency and eliminating the need for trust.

But how do you know which ones are worth trying out? We’ve compiled a list of bleeding-edge protocols that deserve your attention.

Gearbox

The gearbox is a generalized leverage protocol. Through Gearbox, users can access leverage and use it across Defi protocols. For example, the protocol can be used for leverage farming on Yearn or margin trading on Uniswap.

To get started, users initiate a credit account and deposit funds to activate it. Users can then borrow up to 10x the value of their collateral and deploy borrowed funds to whitelisted protocols. You can think of Gearbox as a Defi-native prime brokerage for everything from margin trading to leveraged yield farming.

The gearbox is slated to release a V2 with several new features and integrations soon!

Sturdy

Sturdy is changing the relationship between borrowers and lenders altogether. As the first positive-sum DeFi lending protocol, it offers high-yield lending and interest-free borrowing.

In a typical protocol, the yield for lenders comes from interest paid by borrowers. This creates a zero-sum game where lenders only earn more when borrowers pay more. Sturdy addresses the issue by staking the collateral provided by borrowers and using the yield to pay the lender's interest.

Sturdy enables users to borrow at no interest, unlocking unique use cases like leveraged Convex yield farming. For lenders, the platform offers APYs ranging from 8% to 10%.

Sturdy is the largest lending protocol on Ethereum that has yet to release a token.

Morpho

On most lending protocols, borrowing rates are higher than supply rates. This is because they use the peer-to-pool model, in which all deposits are grouped in pools. Capital efficiency suffers as a result, with much of the pool going unutilized. Morpho addresses this through a peer-to-peer (P2P) model where users are connected directly without using a pool.

Previous attempts at the P2P model have been illiquid, with lenders unable to withdraw funds whenever they want. Morpho addresses this via fallback mechanisms that build on top of existing protocols like Compound. This enables Morpho to offer the same capital efficiency as a P2P lending protocol by desocializing yields while remaining as liquid as the underlying pool.

Euler

Euler is a non-custodial protocol built for permissionless borrowing and lending of risk-on long-tail crypto assets. The existing dominant lending protocols were not made to accommodate volatile illiquid crypto assets. All tokens on these platforms have to be approved by governance. Consequently, a large section of the lending and borrowing market is untouched. That’s where Euler comes in.

Euler is permissionless, enabling users to create pools without a governance process. Euler introduces several other novel mechanics, including an asset classification system, decentralized price oracles, and MEV-resistant liquidations.

Maple

Maple is an institutional crypto-capital network. It improves the capital efficiency of lending markets by providing undercollateralized loans to borrowers and fixed income to lenders on-chain.

As a lender, you can earn yield by depositing funds in pools managed by delegates for institutional borrowers. These pool delegates serve as intermediaries between lenders and borrowers and provide funding to whitelisted institutional borrowers. Pool delegates also issue pool covers to be used in case of default.

Maple represents DeFi’s first steps into uncollateralized lending, which dominate traditional finance.

Whether you’re looking to borrow or lend, these bleeding-edge protocols are reinventing lending, paving the way for a seamless, secure, and lucrative Defi experience.

Like what you read? Share the love!