DeFi Or decentralized finance has been the most trending topic of crypto in 2020. It is basically a term given to the financial services that have no central authority controlling them, unlike banks in which decisions are usually taken by a single person or a company. If you want a brief overview of DeFi click here.
The current Ethereum based DeFi solutions like Compound, Aave, etc only involve a certain number of assets like Ethereum, Dai, Uni, USDT, etc, and act as a gatekeeper in allowing which assets to be part of their pool.
These existing solutions have left behind a majority portion (more than 90%) of ERC-20 tokens despite them having amazing use cases. This is one of the major concerns when it comes to DeFi.
There is a huge market opportunity for a project/protocol that can onboard all these left behind ERC-20 tokens into DeFi space in a decentralized and permission-less way.
One such protocol is UniLend. UniLend aims to address this massive untapped market of 29 Billion dollars and open the DeFi gates for all ERC-20 tokens.
The best part is, Assets supported by UniLend keeps growing as more and more ERC-20 tokens are being created. This makes clear that UniLend has absolutely no limits and has a chance to grow bigger than anyone’s imagination.
Brief Overview on UniLend
UniLend is a decentralized permission-less protocol that combines money markets and spot trading services with lending and borrowing services with the help of smart contracts, unlike any existing DeFi protocol. This integrated smart contract allows for both DeFi capabilities and trading services to co-exist together.
The interest rates and the collateralization ratio in the money markets are based on supply, demand, and other market forces, and borrowing limits are decided by the liquidity in the trading pairs.
As UniLend is a permission-less protocol anyone can list an Ethereum asset (ERC-20) and upon listing the smart contract of the UniLend protocol instantly creates and lists the asset on markets for spot trading, borrowing and lending. Hence UniLend creates separate money markets and trading services upon listing.
UniLend also enables the lenders to choose the acceptable collateralization ratio assets and allowing them to implement their own lending strategy to maximize their returns. Existing lending protocols act like managed funds whereas UniLend is designed like a self-managed fund.
Features of UniLend
1. Permission-less listing:
Any Ethereum based asset (ERC-20 token) can be listed on the UniLend in a completely decentralized and permission-less way without even a DAO (Decentralized Autonomous Organization) controlling the process. Also according to UniLend's official blog, The team said: " we’re also exploring the addition of cross-chain support in the future such as Binance Chain, Monero, etc.. "
Whenever an asset list on UniLend a decentralized spot trading pair is created automatically by the smart contract. Enabling users to trade in the UniLend platform itself.
3. Lending and Borrowing
Users can themselves unlock lending and borrowing services of their tokens. They can borrow assets by paying an interest rate and also earn interest by lending.
The users (token holders) can govern the protocol through proposals. This ensures that adjustments in the protocol are made only if the majority of the users approve it.
Users will be able to provide liquidity to the protocol and earn fees. The amount of fee that can be earned will depend upon the user’s stake in the liquidity pool.
6. UFT Utility
The UFT (UniLend Finance Token), which is the native token of UniLend Finance will be used for Governance, value and many more features are in the line according to the team.
7. User Experience
UniLend platform will have a perfect user-friendly Interface so that anyone can do spot trading or utilize the lending and borrowing services seamlessly.
Some of you reading this blog might have a question that, Spot trading and lending/borrowing services already exist in the platforms like Uniswap and Compound finance respectively.
So how is UniLend better? To answer this question I have compared UniLend with two of the best DeFi protocols: Uniswap and Compound Finance.
UniLend vs Uniswap
Uniswap is the most important and also the most popular part of the DeFi space. UniLend is inspired by Uniswap but has some more additional features compared to Uniswap. UniLend and Uniswap are both permission-less DeFi protocols. Any ERC-20 asset can list on these two protocols seamlessly. Both Protocols also allow spot trading of these assets and also offer a community governance mechanism.
But Uniswap is just a decentralized exchange whereas coming to UniLend, It is a decentralized money market and it also comes with a dex (decentralized exchange) integrated into it. Using UniLend users can also borrow or lend any ERC-20 asset. So, these are the advantages that UniLend has over Uniswap.
UniLend vs Compound
Coming to Compound finance, It offers lending and borrowing services along with tokenized assets and community governance mechanisms. UniLend offers all these services along with spot trading functionality which Compound doesn’t. Also Compound offers the lending and borrowing assets for only a selected number of assets like WBTC, Ether, Dai, USDT, Basic Attention Token, etc.
Whereas UniLend supports permission-less listings where any Ethereum-based asset (ERC-20) can be listed. This feature of UniLend enables it to capture a largely untapped market. Hence, UniLend is creating a convenient all in the platform that users are actually looking forward to experience in the DeFi space.
With the IEOs (Initial Exchange Offerings) growing rapidly in the crypto space, choosing of the selected participants for participating in the public token sale by lottery system grew in popularity. The Lottery based selection was taking place in a centralized manner until UniLend did it in a completely decentralized and unbiased way with the help of Chainlink.
UniLend used Chainlink’s Verifiable Random Function (VRF) to generate a fair and unpredictable source of random number generation (RNG) with cryptographic proofs that are verifiable on-chain by any participant.
From different geographic locations, Ankr will be providing powerful and secure nodes to UniLend helping it to be a truly decentralized project. UniLend will run one of their nodes via Ankr’s robust and direct Ethereum API access.
UniLend will help Bluzelle unlock its full potential by allowing the lending and borrowing services of Bluzelle on its platform in a completely decentralized way. Bluzelle will be one of the first tokens to be listed and used on UniLend’s platform
UniLend Finance aims to become a truly decentralized and permission-less protocol by allowing every ERC-20 token to fully unlock its potential by taking complete advantage of the DeFi ecosystem. It is creating a new niche in the market that has been neglected for a long time and is focusing on a huge multi-billion dollar market. In my opinion, if UniLend can achieve what it actually claims to do then I won't be surprised to see it in the top 100 cryptocurrencies list.