People can opt for a Crypto loan and this activity has grown to become the backbone of the universe of Defi. However, this has gained popularity after contract-based smart borrowing or lending platforms have offered this service to the users of crypto. The Network of Ethereum is the first company of blockchain that have increased the functionality of smart contract.
Crypto Loan Services Become Quite Famous In This Industry
Ethereum experiences locking the majority of the TVL on protocols of DeFi which is completely dominated by platforms that offer Crypto loans. As per the DeFi Pulse data, the top 4 of the protocols of DeFi are used for lending which amounts to $37.04 billion in TVL. This is only 49% of TVL of all the market of DeFi on the blockchain of Ethereum.
ETH is number one in the use of blockchain for TVL or the market of DeFi. The big players in this space are Aave and Maker who possess a TVL of $11.19 billion and $14.52 billion, respectively. Other networks on blockchain like Avalanche, BNB Chain, Solana, and Terra, the Crypto Loans services are mostly used by users.
As per the source of DefiLlama, there are almost 138 protocols that offer services of crypto loans to the users and causing a TVL of $50.66 billion. Some of the well-known players in this business are Venus, JustLend, Solend, Compound, BENQI, and many more. The process helps the users lend and borrow digital assets and pays interest or a fee for the same.
The people who want to borrow must deposit collateral that will immediately give them a loan that can be used for purposes mentioned in the portfolios. Though this service of providing loans has become very popular and even countries like Nigeria are opting for it, still some risks and considerations lurk in this business. Users should be aware of liquidation and smart contract risks.
