A contender in the DeFi space for CDP loans.
While many in the crypto space are familiar with the MakerDao and its asset based decentralized loan program based on the ownership of Ethereum, which democratized lending and allows smaller investors to profit both from the appreciation of their asset like Ethereum, and to borrow against it to invest in a second asset, or profit from losing capital. There are other companies or projects in the DeFi space. I recently did an article on DJED, now called JUST and today I wish to bring your attention to another project called dYdX.
This project, dYdX operates similar to the MakerDao with Ethereum being used as the deposit or locked up asset or collateral for the CDP or loan. Thus far the one year volume of loans on dXdY is over one billion US dollars. Currently per LOANSCAN data their are over 8.7 million dollars US in outstanding CDP or loans backed by Ethereum in this project.
source
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dYdX assets March 30
The average interest rate of 2.53% calculated by LOANSCAN would suggest approximately 31.5 million in interest charges in one year. This suggests that Decentralized Finance continues to be a growing and profitable Niche on the Ethereum blockchain. This competition is good for Decentralized Finance and it’s customers.
In brief, dYdX is a decentralized exchange (trading platform that provides margin trading, spot trading, lending, and borrowing. The project runs on smart contracts on the Ethereum blockchain, and allows direct peer to peer trading, as in no intermediaries.
It claims to be one of the highest volume decentralized exchanges or DEXs, and LOANSCAN data supports claims of very high volume with the concomitant liquidity. It also supports leveraged trading of these pairs: ETH-DAI, ETH-USDC, and DAI-USDC. My focus here is borrowing but as you can see there are many financial and trading tools offered by dYdX.
The credit facility CDP model currently supports ETH, DAI and USDC. So you deposit ETH and borrow Stablecoins DAI or USDC purchased by dYdX on open market. The minimum starting account collateralization of 125%, which must be maintained above 115% to prevent liquidation. Compare to MakerDao 150% Collateralization ratio. Some details include no minimum loan period, interest paid out on every block, no loan waiting period and interest rates are dynamic and adjusted according to utilization, which is similar to MakerDao and other DeFi projects.
Further information about dYdX can be obtained at this
link
I think this is an important financial growth sector. The fact that MicroSoft is involved in DeFi, the recent move by Binance to further develop their DeFi capabilities with more credit debt facility capabilities and new credit debt facilities on Tron suggest growing interest and significant investment in this area. Knowledge is power, which can create wealth and freedom.
Stay thirsty for knowledge my friends.
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✍🏼 Written by Shortsegments. ✍🏼
Knowledge can be used to create wealth.
***Wealth creates or permits freedom to live your life your way.
Stay thirsty for knowledge my friend.
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Source
dYdX link
loanscanLink
Information and graphics provided by LoanScan an organization providing analytic data on transactions, loans, repayments and assets held by a MakerDao, Compound, dYdX and Dharma.
