Lending protocols have always been an important infrastructure in the DEFI field. Since the 2020 DEFI Summer, there have been few major innovations in lending protocols. The peer-to-pool lending model represented by lending protocols such as Aave and Venus has been dominating the lending market.
On April 11, Lista DAO on the BNB chain launched a brand new peer-to-peer lending model. I dug into Lista Lending and found some interesting points. This article will deeply analyze the specific innovations of Lista Lending, the operating process of the peer-to-peer lending market, the similarities and differences between peer-to-peer lending and peer-to-pool lending, and the benefits that Lista Lending may bring to the BNB DeFi ecosystem.
I. Innovations of Lista Lending
On April 11, Lista DAO officially launched the peer-to-peer lending market. Compared with traditional peer-to-pool lending models such as Aave and Venus, Lista Lending has the following innovations:
1. Anyone/protocol can build a P2P lending market for specific assets and manage it flexibly
Traditional point-to-pool lending protocols put borrowing and lending assets in the same pool, and usually require governance voting to add new assets or adjust lending rates and other parameters. This process usually takes weeks or even months.
Lista Lending allows any individual, protocol, or DAO to create their own lending market without governance approval. For example, a user can quickly create a slisBNB/lisUSD market to provide lending services for specific asset pairs. This permissionless design greatly improves the flexibility of the lending market, allowing the market to respond quickly to user needs.
2. Introducing a New Role - Vault System
The traditional peer-to-pool lending model mainly consists of three roles: depositors, borrowers, and the protocol itself. Lista Lending introduces a new role: the "Vault".
The vault aggregates user deposits and dynamically allocates them to different lending markets. For example, you deposit USDT into a vault, which may be allocated to markets such as USDT/BNB or USDT/ETH, thereby optimizing returns. This design simplifies user operations and ensures capital security through professional management.
3. Introducing Multiple Oracles
To ensure the accuracy of asset prices, Lista Lending uses multiple oracles (Chainlink, Pyth, etc.) to cross-validate data. Compared to protocols that rely on a single oracle, this reduces the probability of price manipulation or errors. For example, during periods of high market volatility, a single oracle may make mistakes, leading to unfair liquidations, while Lista Lending's multiple verifications can better protect users.
II. How does the Peer-to-Peer Lending Market Work?
Lista Lending's peer-to-peer lending market mainly has the following roles:
1. Supplier: A person, DAO, or hedge fund that deposits assets into the vault. They earn interest paid by borrowers. For example, a user or DAO organization may deposit 100,000 USDT, expecting to earn income through lending.
2. Borrower: A person who borrows assets from the market and needs to deposit collateral. For example, a borrower may use BNB as collateral to borrow USDT for other investments.
3. Vault: A pool that holds a certain type of loan asset (such as USDT), responsible for allocating funds in multiple markets, and the loan assets in the vault are provided by suppliers.
4. Market: An independent lending pool that matches a collateral asset and a loan asset (such as USDT/BNB). In theory, there can be countless markets on Lista Lending, and each market has risk isolation and fixed parameters.
Lista Lending's Operation Process:
1. Suppliers deposit assets (such as USDT) into the vault. The vault only accepts a single type of loan asset.
2. The vault allocates these assets to multiple markets, such as the USDT/BNB market or the USDT/ETH market, to match borrower demand.
3. The borrower selects a market, deposits collateral (such as BNB), and borrows assets (such as USDT).
4. The interest rate of each market is automatically adjusted according to supply and demand. If USDT demand is high, the interest rate rises, and vice versa.
5. The borrower retrieves the collateral after repaying the loan; if the value of the collateral falls below the liquidation line (such as the LLTV ratio), the system automatically liquidates to protect the supplier.
6. Suppliers can withdraw principal and interest at any time, as long as the vault has sufficient liquidity.
III. Peer-to-Peer Lending Model VS Peer-to-Pool Lending Model
Compared with the traditional peer-to-pool model, Lista Lending's peer-to-peer model has the following advantages:
1. Higher Capital Efficiency
The point-to-pool model puts all assets in a large pool, and the interest rate spread between suppliers and borrowers is large. For example, in Venus, when the utilization rate is 57%, the annualized yield (APY) for suppliers may be only 4.48%, while borrowers pay 8.92% interest. The point-to-point model reduces intermediate costs by directly matching the two parties, allowing suppliers to earn more and borrowers to pay less.
2. Greater Flexibility
Peer-to-pool requires governance approval to add new assets, and the reaction is slow. P2P allows users to create markets instantly. For example, if you want to use a niche token as collateral, you can do it in a few minutes on Lista Lending. I personally guess that Lista Lending may develop this peer-to-peer lending market for other assets on the BNB chain in the future. Then, each project party can lend its own tokens.
3. Safer Risk Isolation
In the point-to-pool, all assets share risks. If one asset plummets, the entire pool may be affected. Each market in the peer-to-peer is independent. For example, if there is a problem in the USDT/BNB market, it will not affect the USDT/ETH market, and the system is more stable.
4. Greater Diversity
Peer-to-pool usually only supports mainstream assets, limiting choices. Peer-to-peer markets can theoretically support any token pair, such as slisBNB/lisUSD, meeting more user needs.
5. More dynamic interest rate adjustment
The interest rate of the point-to-pool is determined by a fixed curve, which may not be flexible enough. The interest rate of point-to-point is adjusted in real time according to market supply and demand, which is more fair and efficient. For example, when USDT demand surges, the interest rate automatically rises, incentivizing more suppliers to join.
IV. What benefits will Lista's peer-to-peer lending market bring to the BNB ecosystem?
The peer-to-peer lending model not only improves the lending experience of Lista Lending itself, but also brings two obvious benefits to the DeFi ecosystem of the BNB chain:
1. It can improve the capital efficiency on the BNB chain:
Currently, the TVL lending ratio of the Ethereum ecosystem is as high as 50%, while the lending ratio of TVL on the BNB chain is about 35%, and the efficiency of capital utilization on the BNB chain is relatively low.
Lista Lending provides an efficient peer-to-peer lending market to meet users' needs for better interest rates and more collateral choices. For example, users can use slisBNB to borrow lisUSD, etc. Moreover, the innovative vault system can aggregate funds and dynamically allocate them, which can further improve capital utilization.
2. Create a more prosperous BNB DEFI market
Because Lista Lending is a permissionless peer-to-peer market, anyone or team can create a lending market for new tokens, and various new DEFI protocols can be nested based on the new lending market, which will greatly promote the development of DeFi on the BNB chain.
Summary:
Lista Lending's peer-to-peer lending model brings a more efficient, flexible, and secure lending platform to the BNB chain through innovative designs such as open permission design, vault system, and multiple oracles. Compared to the traditional peer-to-pool model, it has great advantages in capital efficiency, flexibility, risk management, asset diversity, and interest rate dynamics. These characteristics can not only improve capital efficiency on the BNB chain, but also further promote the prosperity of DEFI on the BNB chain.
Currently, since its launch on April 11, as of April 18, Lista Lending has two major vaults and five markets. Among them, the Lista WBNB vault has more than 200 million US dollars, supporting three lending markets such as BTCB/WBNB and solvBTC/WBNB; the new Lista USD1 vault has two markets: BTCB/USD1 and WBNB/USD1. I look forward to seeing a larger and more diverse Lista peer-to-peer lending market.
Author of this article:
CG｜Zhou Yijian
One sword a week, I write what I invest; use sincere words to tell the story of excellent Crypto projects;