A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

The DeFi lending environment has changed dramatically over the past few months, and I think it’s worth taking a look at some updates in this space. So here’s a note about the new protocol, statistics about the protocol, and what the project will lead the borrowing in the next cycle.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

New lending agreement

DammFinance and RibbonFinance are floating-rate lending agreements with insufficient collateral. They are similar in nature to Aave’s pool model, where deposits and loans are frictionless.

dAMM currently serves 23 assets, and Ribbon is coming soon.

Lulo is an on-chain P2P order book with fixed interest rates and term loans. Much like Morpho, Lulo closes the lender/borrower spread, which is traditionally based on the pool model, and matches the counterparty directly.

ArcadiaFinance is a lending agreement that allows borrowers to mortgage multiple assets (ERC-20 and NFT) into a single vault. These vaults are NFTs, so composable second-tier products can be built, and lenders can choose their risk appetite based on the quality of the vaults.

Arcxmoney is a lending agreement that values the borrower’s historical trading behavior on the chain. The better the history (that is, no liquidation), the higher the maximum LTV. By far the biggest borrowing is 100% LTV. The lender provides liquidity based on the borrower’s credit risk.

dAMM and Ribbon compete directly with Maple and Atlendis in institutional (undercollateralized) lending.

Arcadia, ArcX, and Frax are variants of existing models that we’ve seen in the field.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

Many protocols continue to pursue the verticalization of products in an attempt to increase moats and value capture:

  • Frax: stablecoin, AMO, AMM, liquid stake
  • AAVE: stablecoins, loans with insufficient collateral, RWAs
  • ArcX: Credit score
  • Ribbon: Vault + Loan

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

Some loan agreements are more focused on catering to the needs of long-tail assets. On the institutional side, dAMM is the only one that already has many long-tail assets. Eulerfinance allows lending and borrowing of any asset, some of which can be mortgaged.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

So far, AAVE has been a clear winner, in part because of its aggressive multi-chain deployments – 37% of its total TVL is on L2 or EVM. COMP v3 is slow to move funds from v2, v2 is in second place, and Maple is the most popular undercollateral agreement.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

In the past month, Euler and Clearpool are the only 2 semi-mature platforms to see significant growth.

AAVE and Compound are in the middle, while Kashi shrinks the most.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

Most lending TVLs reside on the mainnet, but EVM and L2 have been slowly gaining market share.

In the next cycle, the increase in the use of L2 and the number of projects will accelerate the demand for leverage, thereby accelerating overall liquidity.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

As far as TVLs are concerned, the over-secured model has dominated so far.

This gap is expected to narrow considerably as KYC and ZK-based certifications unleash new use cases and more institutional capital enters the chain.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

As for the lending of blue-chip assets and long-tail assets, blue-chip assets currently represent almost all liquidity.

Euler is the most prominent agreement focused on long-tail assets, but its long-tail assets also have TVLs below 5%, mainly due to the opportunity cost of token collateralization.

Why deposit $GRT tokens into Euler when (illiquid) pledges can earn higher APRs (10-30x)?

This will change over time as we see more liquid collateral derivatives in the Web3 and DeFi protocols, where tokens can earn and be lent out at the same time.

Verticalization is an interesting trend to see in all DeFi, as lending isn’t the only sector with an increasing concentration of market share, with Lido, Uniswap, and MakerDAO having strong market share in their respective categories.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

Over time, we may see DeFi (and lending) continue to concentrate… Similar to the past few decades, the size of large banks has continued to expand.

There are 3 reasons for this: strong network effects, verticalization (turning products into functions), and brand moats.

A quick look at the new DeFi lending landscape: what are the changes in new and old lending projects?

New lending experiments

1) Under-collateralized based on zk proof of out-of-chain collateral (and KYC-pegged)

2) Loans that use NFTs based on social context as collateral

3) DAO-focused loans

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/a-quick-look-at-the-new-defi-lending-landscape-what-are-the-changes-in-new-and-old-lending-projects/
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