ADALend is a platform that offers new functionality and security to individuals who want to procure loans. This is the first decentralized lending protocol on the cardano network that allows clients to efficiently get loans using liquidity pools.
The cryptocurrency market is a legitimate source of debt securities and crypto traders have turned to fixed-income instruments like bonds and stocks as a way of diversifying their portfolios. Lenders and borrowers hope to stabilize their revenue and reduce their risk with interest rate derivative products.
In the cryptocurrency market, there are two types of interest derivatives. There are those that allow you to extend the length of your loan and those that enable you to raise the interest rates. In the crypto financial market, the interest rates offered to borrowers are different from those offered to lenders.
The interest rate is dependent on the total amount of money available in the liquidity pool, which is denominated in the platform’s LP token. The ADALend platform is designed to maintain the utilization ratio at a low level for non-stable coins. In doing so, the platform will maintain a higher amount of tokens in circulation at the same time.
The utilization ratio is a ratio between the total amount of tokens in circulation and the number of tokens actually used by the platform. The high amount of tokens in circulation allows the platform to support liquidity mining, thereby rewarding the token holder. When the borrower pays off the loan, the lender will pay back the interest to the token holder who has been holding the token. Interestingly, this is what makes the token a valued asset.
As ADALend’s design to constantly evolve and upgrade with new features that keep the overall system secure, one of its core projects is to make use of idle assets. The protocol does this by shifting a portion of the idle assets to stable swap platforms with no temporary loss within the acceptable range.
Additionally, instead of storing your assets in cold storage, they can be leased out or borrowed to support the ADALend Lending protocol. This will not only aid in the recovery of the asset’s idleness, but it will also be beneficial to everyone in the blockchain market sector, and the asset’s owner as a result of its sale.