Crypto Collateral Loans — the DeFi Revolution

This article was first published on æternity blog - Medium

Crypto Collateral Loans — the DeFi Revolution

Current market situation and how æternity is changing the game

Blockchain technology holds the potential to deliver far more than an alternative means of value storage and transfer. While the launch of the Bitcoin blockchain in 2009 brought the first truly peer-to-peer payments platform to the world, the rapid evolution of blockchain technology has made possible to create peer-to-peer financial ecosystems with far more functionality than value transfer.

Decentralized finance, or DeFi, leverages blockchain technology in order to create decentralized, peer-to-peer alternatives to traditional financial instruments or systems that are free from middlemen or third party control.

Crypto lending is one of the most obvious applications of blockchain technology and cryptocurrency, and has captured a significant amount of attention over the last few years. Unlike traditional fiat currency lending, cryptocurrency is automated, in many cases decentralized, and is executed in a completely code-based ecosystem.

To take things to the next level, a more refined and nuanced technical approach is needed. This would allow for people from all walks of life to access the wide plethora of features that blockchain technology has to offer. Luckily, æternity has created a blockchain-powered environment in which anybody can create their own blockchain token or network, for any purpose — including DeFi or crypto loans.

However, before we take a closer look as to how æternity blockchain is a game changer, let’s cover the basics:

What is Crypto Lending?

Crypto lending is a broad term used to define the ever-growing environment in which people can use cryptocurrency in order to acquire a loan and this gain access to financing — be it in fiat or in crypto. It works in a similar fashion to peer-to-peer lending, where lenders and borrowers are connected via online platforms, but the trade currency is crypto instead of fiat money.

This concept allows ...

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