Decentralized Lending Platforms: Aave, MakerDAO, Compound, Alchemix, PhoenixDao and Venus Comparison

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decentralized lending platforms

Decentralized lending platforms are an innovative way to get crypto coins. They’re a new type of technology that enables borrowing and lending without the support of a financial institution. In this article, we’ll take a look at some of the top decentralized lending platforms on the market today and compare them head to head, including Aave vs MakerDAO vs Compound vs Alchemix vs Venus. Let’s dive in!

Top Six Decentralized Lending Platforms

Here are some of the topmost decentralized lending platforms you should know about.

Among decentralized applications (dapps), the largest sector has been lending and borrowing crypto assets within today’s data-centric world. Decentralized lending platforms let anyone, anywhere, lend and share crypto assets using an Ethereum wallet. By implementing the benefits of blockchain and cryptocurrency, these DeFi lending platforms become the next generation of financial services.

Using a distributed and decentralized application system, DeFi lending enables investors and lenders to issue loans or deposit fiat for interest. Lenders find this to be an attractive option since it allows them to earn a relatively low-risk interest rate on existing holdings without having to divulge personal information.

Recently, the marketplace has seen even more innovative and valuable decentralized lending platforms. It has created a fundamental breakthrough for the future of finance and cryptocurrency to be able to borrow and lend assets among completely open applications.

Here are some of the topmost decentralized lending platforms you should know about.

1. Aave

Users can participate as depositors or borrowers on Ave, a decentralized non-custodial liquidity market platform. Likewise, borrowers can borrow in either an over-collateralized (perpetually) or under-collateralized (one-block liquidity) manner, according to the Aave website.

Using the Aave protocol, users first deposit an asset and amount. Shortly after, the lender earns passive income based on market borrowing demand. A deposit can also be used as a collateral for borrowing. The interest earned by depositing funds can be used to offset the interest rate accumulated by borrowing.

2. MakerDAO

MakerDAO is a widely used decentralized governance platform based on the cryptocurrency DAI, which is a stablecoin whose target price is $1. Using an embedded governance mechanism within the Maker Protocol, MakerDAO’s decentralized governance community manages the generation of DAI.

DAI stablecoin is made stable by the Maker Protocol, which allows lenders and borrowers to borrow different digital currencies without the risk of counterparty risk. The Protocol was the first decentralized finance application to achieve widespread adoption and remains one of the largest decentralized applications (DAPP) on the Ethereum blockchain.

3. Compound

In terms of cryptocurrency, Compound is a DeFi-based lending application that uses pools of capital to support each of its supported assets, using a money market approach. With no fixed loan duration, lending pools allow lenders to deposit amounts and earn interest continuously.

Recently, Compound implemented a new governance system to replace their past protocol administrator with a community-based approach that allows users to suggest, debate, and implement developments. 

4. PhoenixDAO

In addition to providing custom-made solutions to businesses and institutions, PhoenixDAO impacts the development of new DeFi applications. The platform will be governed and controlled by a community of invested participants, and the DAO will be powered by Phoenix’s Identity-based dapp store to ensure one-person-one-vote.

PHNX token holders can earn up to 20% APY on staked tokens through this decentralized application. At PhoenixDAO, a team is currently working on implementing advanced features, such as liquidity farming and support for the PHNX token on the DAO platform.

5. Alchemix

In Alchemix, loans are provided using a new method that “pays themselves back over time.” DAI is deposited into a smart contract. In return, the user receives a token that represents future yield farming potential. Through Alchemix, the token used is alUSD, which is a digital currency that can be traded on DeFi exchanges for DAI.

On the company’s website, the platform promises “to reimagine the potential of DeFi through instant, highly flexible loans that pay themselves back over time. The synthetic protocol token (alUSD) is backed by future yields.”

6. Venus

The Venus decentralized marketplace connects lenders and borrowers with borderless stablecoins. On its website, the platform describes itself as enabling “the first decentralized stablecoin in the world, VAI, that is backed up by a basket of stablecoins and crypto assets without central control.”

The protocol sets interest rates in a curve yield, where the rate is automatically determined by the market demand.

“The difference of Venus from other money market protocols is the ability to use the collateral supplied to the market not only to borrow other assets but also to mint synthetic stablecoins with over-collateralized positions that protect the protocol.”

Via this site.


Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.