Lending - Borrowing
Lending and borrowing are two components that increase liquidity flow in financial systems. For example, you have Bitcoins, but you want to leverage your holding without selling your BTC. So, you can stake your BTC (you can also use your house as collateral in this sense) as collateral to borrow SigUSD and use it in exchanges or yield farming protocols. On the other side of your interaction, another user can leverage her unused SigUSD by staking in the lending protocol. Traditional banks have very low-interest rates, and they might suck up a lot of revenue from your deposits. With decentral lending protocols such as Compound, users will be able to use lend/borrow services and move their funds across all crypto ecosystems without any need for centralized platforms such as banks or exchanges. Crypto lending protocols are open to more experimental designs such as interest-free loans, innovating even more use cases on blockchains.
- Loans: we have an interest-free loan contract example
- With SigmaUSD, loans can be attractive to miners and not only.
- Please also check the targeted microloan contract from "Smart Contracts for the People" article: