Original title:Sept. 22, 2022: Lender's GameOriginal title:

, Author: crv.mktcap.eth, Translator: Odaily Shiwen

In a falling market, where are the seeds of the next bull market buried? Perhaps, you can look for opportunities from lending projects."Crypto lending is particularly interesting. In TradFi, lenders can borrow cheap mortgages because in real life there are"Credit

On this front, we still see lending protocols flourishing. Developers are innovating rapidly, especially finding new ways to improve the borrower experience. For example, we have recently observed two popular strategies: zero interest rate and zero liquidation. In this article, we review these attempts and present the progress of related projects.

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0 interest rate loan

It's not hard to see why a 0% interest rate loan would be attractive. If you take out a loan at x%, you have to earn >x% on whatever you receive, or you lose money (not to mention the price volatility of those assets).

The problem is, there is no reliable way to earn a return on the tokens you borrow. DeFi is a risky game. Lately, the low-risk U.S. dollar has yielded worse than U.S. Treasuries. High returns are risky.

A 0% interest rate puts those worries to rest. You may still have to worry about changes in the price of the underlying asset, but at least compound interest won't work against you. You can wait to repay the loan until conditions are more favorable.True risk seekers can also use 0% interest rates as leverage. Use your loan to buy more collateral and keep increasing the amount of collateral to your satisfaction. This is certainly not recommended for beginners, although very popular among degens.

(Note: Not financial advice!)Liquity is able to offer a 0% interest rate, and on top of that, they have built a great textbook example of a decentralized stablecoin.

Lending ETH and minting LUSD does not incur a lending rate, which helps borrowers. The protocol makes money through dynamic lending and redemption fees rather than interest rates, which adjust based on market demand.

Borrowers do need to worry about liquidation, as this usually hurts those who take advantage of low mortgage rates to increase leverage. Liquity's market cap tends to track the price of ETH, but otherwise, Liquity's mechanics have proven to be very resilient through multiple market swings.

It is worth reminding that they launched Chicken Bonds yesterday.

Chicken Bonds introduces a new, innovative form of bond while providing LUSD holders with opportunities to amplify earnings and trade, and stabilize LUSD prices.

• Compared with other bond mechanisms, Chicken Bonds has the following advantages.

• your principal is protected

• no locking issues

• bLUSD can be redeemed for LUSD at any time

• Details can be found inherehere

Check.Qi DAO also offers lending at 0% interest to mint their Mai USD-pegged token.

Qi has tested this model on multiple sidechains and will deploy it on the mainnet, which is worth researching by DeFi miners.

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zero liquidation

The concept of zero liquidation loans is also very popular. Due to the volatility of cryptocurrencies, liquidation is a poor user experience issue for borrowers, as a momentary drop in price can trigger liquidation.

Alchemix popularized the concept of liquidation-free, self-paying loans. You give them money, the money is locked and you get the proceeds to pay back the loan. This is a friendly and passive lending option, especially for users who do not actively manage their positions.

Aladdin DAO's CLever extends Alchemix's model to complement Convex yields. Also not liquidated. CLever manages automatic compounding yields.

Despite the challenges of entering a bear market, CLever has succeeded in its goal of accumulating Convex tokens.

They are also continuing to grow their product and expand into Frax.

CLever will release CLEVER tokens soon, and there may be airdrop expectations.

Lendflare is another protocol. They offer borrower-friendly terms: fixed rates, fixed terms, and no liquidation on select Curve LP positions.

Vendor Finance

They manage this by having all lending happen between like-for-like assets, i.e. borrowing from 3pool in USDC, so there is little risk of price fluctuations. Most of their coffers are being used. They face the challenge of launching in a bear market, so we are delighted to see that they continue to develop rapidly and recently released their V2 release.Earlier this month,Vendor Finance launches its public beta on Arbitrum". The agreement boasts its"No liquidation, fixed rate, permanent loan

The advantages."Unlike the previously discussed protocols, Vendor accomplishes theirs by requiring lenders to pre-set fixed loan terms."。

no liquidation loan

All loans created on Vendor have a fixed end date and a fixed (or decreasing) interest rate. The lender sets the terms, and the borrower borrows directly from the lender.

Likewise, Vendor Finance still has the concept of default in its system. Liquidations can cost you due to random price movements, but in Vendor, you can only lose due to not fulfilling the terms you agreed to in advance. They forfeit the collateral if the borrower does not pay back by the due date. Price fluctuations do not affect this equation.

Borrowers also have the option to roll over (the process of migrating your debt from the original pool to a target pool with a longer repayment term) the loan closer to its maturity date.

If this shifts the risk onto the lender, it can be mitigated by the lender's flexibility in setting the terms.

Anyone can unconditionally start a pool for any asset on the whitelist, which includes commonly used assets ($WETH, $WBTC, major stablecoins) and others like $CRV, $FRAX, $UMAMI.

As such, the protocol opens up new potential use cases for lenders, such as creating strategies for DAOs to monetize their coffers. For example, DAOs can use Vendor as a funding vehicle, lending any asset from their funds while taking any collateral they want.

Some thoughts from the community:

If I am bullish on UMAMI tokens, I can create a 50% LTV pool offering 10000 USDC in exchange for 20000 worth of UMAMI tokens. If the borrower fails to pay back, I get cheap UMAMI tokens. It's worth noting that this plan could backfire if the value of your assets falls more than the value of the loan.