Conventional loans offered by banks are such that the banks have the ultimate control of the loans and the individuals who procure the said loans with underlying collaterals. ADALend offers new functionality and security to individuals who want to procure loans. This is the first decentralized lending protocol on the cardano proof-of Stake network that allows clients to get loans using liquidity pools.
ADAlend is a decentralized platform that uses smart contracts to allow decentralized crypto-lending and the creation of financial products which can be controlled at the individual level. Built on the Cardano smart contract, the platform aims at bridging the gap between the lending segment using blockchain technology. The ADALend protocol will power the new wave of flexible financial markets by serving as a foundational layer for instant loan approval, automated collateral, trustless custody, and liquidity.
Lending made easy using Liquidity Pools
ADALend requires no collateral for individuals to participate in the lending operations. Liquidity provision is an integral part of the platform, which will function with internal and external oracles to establish the dynamic rates for liquidity pools. Liquidity is predicated on having enough assets in each pool in order to facilitate lending. Participants can deposit any amount and receive the corresponding APY value set by the protocol in share tokens.
The process of converting share tokens into underlying token counterparts is termed redeem operations. During this process, the tokens are burned and returned to the user to complete the transaction. Consequently, the underlying token might have grown in value since the value of share tokens increases over time.
The repayment operation is the process of repaying back the loan as well as the interest received over the loan period. The borrower sends back the money to the liquidity ecosystem of ADALend which in turn, distributes the money and interest accrued between the liquidity providers (lenders).
Multiple Security Mechanism To The Lending Protocol
One of the main focuses of ADALend protocol is the anonymity and security of its clients. This is done by incorporating mechanisms to monitor and track the health and security of the system. The platform also has internal and external oracles to maintain multiple computational layers that check and ensure stable prices of the liquidity pools.
Furthermore, the Protocol’s architecture, code quality, health monitors, active liquidation bots, and insurance are strongly in place. These features all contribute to the project’s overall security and safety. The ADALend platform is also designed to constantly evolve and upgrade with new features that keep the overall system security.