#OnChainLendingSurge

On-chain lending is evolving at lightning speed. It was first introduced as a protocol-first innovation — largely unreliant on the organizational oversight seen in institutional lending. It quickly evolved from a means for anonymous parties to lend and borrow at their own rates to fully automated and decentralized overcollateralized lending protocols such as Aave and Compound.

These DeFi lending protocols revolutionized credit by making it immediately accessible to anyone with a wallet address. But the biggest trade-off was capital inefficiency. The radical accessibility of lending protocols locked in more capital than it lent.

This problem in capital efficiency inspired others to approach this attempt at decentralized finance from a different angle. Instead of decentralizing the lending process they looked for new ways to extend credit into the DeFi ecosystem — in hopes of increasing efficiency and keeping the credit more accessible.