As the crypto market is crumbling amid the rising inflation, Cardano’s dApp ecosystem continues to boom at rapid rates. In mid-June, IOHK announced over 1,000 projects were building on the blockchain, most of them focused on NFTs. With the Vasil hardfork around the corner, things are about to change for Cardano DeFi.
Undoubtedly, many platforms are getting ready to leverage the improvements in network throughput. Among the few delayed DeFi and NFT projects, all Cardano lending protocols have been waiting on the sidelines. As their launch is soon to become imminent, they will unleash the true potential of Cardano. Here are the top 5 lending and borrowing protocols on Cardano to look out for:
Liqwid Finance
Liqwid Finance is what one would expect from a lending protocol on any other blockchain. Arguably, the significant difference here is that Liqwid leverages all perks of building on Cardano. The protocol’s concept aims to deliver an algorithmic and non-custodial interest rate mechanism.
In other words, all interest rates are algorithmically determined based on supply and demand. The platform will implement built-in stability mechanisms to enable seamless lending and borrowing of Cardano native assets.
When it comes to DeFi lending and borrowing, most protocols offer the standard crypto-backed loans. In this regard, it’s safe to say that is an entirely different beast. The Cardano DeFi platform plans to take the entire ecosystem by storm by getting a banking license.
Consequently, the lending protocol will deliver a long-overdue solution to investing in crypto and having to hang on to it. Ultimately, MELD users will have the opportunity to unlock the value of their crypto assets by borrowing against fiat like USD and EUR.
is yet another centerfold DeFi hub to launch on the Cardano blockchain. As the platform claims, Ardana strives to become the “first all-in-one stablecoin ecosystem on Cardano”. Indeed, the protocol has a lot to offer, starting from primitives like Stable Pools and the dUSD stablecoin.
While the algorithmic stablecoin will enable users to leverage Cardano native assets, Danaswap will allow them to swap between stable asset sets. In turn, liquidity providers will earn DANA rewards, which will be fundamental in Ardana’s governance process.
FluidTokens
Undoubtedly, one of Cardano’s most significant advantages over other blockchains like Ethereum is the lack of token standards. This feature gives NFTs enhanced security and a broader use case, including DeFi lending and borrowing.
FluidTokens allows users to offer their NFTs as collateral and borrow Cardano native assets in a peer-to-peer manner. Moreover, they can bundle up to 10 pieces together to further optimize their collection’s liquidity. Ultimately, NFT enthusiasts can unlock their liquidity without selling their precious digital art.
Aada Finance
Arguably, Aada Finance is set to become one of the most innovative lending and borrowing protocols in Cardano DeFi. The lending platform will introduce a unique NFT-bond mechanism, which tokenizes all lender-borrower interactions in NFTs. In other words, all loans and loan requests will be represented by NFTs that participants will hold.
The NFT-bond feature will introduce a new catalog of use cases, allowing users to transfer and trade their loans. Ultimately, borrowers who cannot repay their loans will be able to sell them at a dedicated NFT-bond marketplace. The Aada V1 peer-to-peer dApp is currently on public testnet and is set to deploy on mainnet right after Vasil hardfork.
Conclusion
While Cardano DeFi is still in its early stages, it already looks quite promising with VC-backed giants like Liqwid, MELD, and Ardana. Still, the movement’s slogan is innovation, as Aada Finance and FluidTokens seemingly break the ice of standard lending and borrowing primitives.
In both cases, the Vasil hardfork sets expectations high for the developers who have been working for months to deliver robust and efficient code to the Cardano community. Ultimately, the latter will soon have the chance to get a taste of the blockchain’s actual lending and borrowing capabilities.
