Decentralized Finance (De-Fi) is the buzz word in the blockchain space throughout 2019 and 2020. Along with gaming, it is the top sector where blockchain adoption is picking up pace. Coinbase has just made the De-Fi lending and borrowing process easier for everyone.
De-Fi Lending and Borrowing
Blockchain-based lending and borrowing platforms have become quite popular. Maker is the single biggest DApp platform that runs on Ethereum. Its loan system is automatic and run by smart contracts. Similarly, De-Fi apps like Compound and dYdX can provide loans that can be used by an individual or an organization in need.
Existing Pain Points
To identify the best source to deposit collaterals and also earn loan, a user needs to look into the below main parameters:
- Interest Rate: Also called Stability Fee in Maker, Annual Percentage Yield (APY) in Compound. The APY varies for different collaterals.
- Collateral Ratio: This is used in MakerDao – (Collateral Deposit Value: Loan Value)
- Savings Rate: Interest Earned by holding a coin of a lending project
To borrow a certain amount, a user accesses these apps through the wallet’s built-in decentralized application (DApp) browser or via WalletLink on desktop. It isn’t easy to compare rates or view total balances across different providers and also among different collaterals among these providers.
Previously, we covered the news of MakerDao making plans of future-proofing to avert bad debt.
De-Fi made easy in Coinbase Wallet
Coinbase has announced that it will integrate all De-Fi apps into a single Wallet experience. The users can choose collateral, a borrowing coin, a service provider (smart contract) and enter the amount they wish to lend. Some of the features that users will be able to enjoy as a result include:
- Compare different rates from providers
- Easily deposit crypto without opening a web browser
- View balances on a simple, unified dashboard
The wallet feature is going to release in the coming week. As Coinbase is acting as a broker, we do not know if there are any applicable fees. Please bear in mind that De-Fi is in a very nascent stage that needs to be carefully understood before taking any transaction decisions. Returns are not guaranteed and deposits are not insured.
Coinbase was basically become a spy for the IRS. I haven’t used Coinbase and won’t. I am sure my onboard method is now better. But I feel better not using Coinbase for anything.