The Evolution of DeFi Lending Protocols
The Evolution of DeFi Lending Protocols! Decentralized Finance (DeFi) has revolutionized the financial landscape, with lending protocols emerging as one of the most significant innovations in the space. Unlike traditional banks, DeFi lending operates without intermediaries, enabling users to borrow and lend assets in a trustless, transparent, and permissionless manner. The Early Days of DeFi Lending In the early stages of DeFi, lending was relatively simple. Platforms like MakerDAO pioneered decentralized lending with the introduction of collateralized loans using DAI, a stablecoin pegged to the US dollar. Borrowers could lock up their Ethereum (ETH) as collateral and mint DAI, creating a new way to access liquidity without selling assets. The Rise of Algorithmic Lending Protocols As DeFi evolved, platforms like Compound and Aave introduced algorithmic lending, allowing users to supply assets to liquidity pools and earn interest. These platforms introduced Features such as: Variable i...