Borrow money instantly
Borrowers can access loans instantly without waiting for a lender to match their request. This is crucial for borrowers because individual lenders bear the risk of default, making it challenging for them to lend money.
In a peer-to-peer (P2P) lending model, the waiting time for borrowers can vary significantly. For example, when asset prices are rising, borrowers might wait hours to find a lender. However, when prices are falling, they could wait days to secure a loan.
Examples
NFT
Alice purchased an ordinal for 0.2 BTC when prices were rising.
As prices began to fall, she urgently needed liquidity against her ordinal.
Unfortunately, she waited for days because lenders were reluctant to take on the risk of default as prices dropped
Crypto(BTC, Runes)
Alice bought $10,000 worth of Runes tokens when prices were high.
When the market turned bearish, she faced difficulties accessing liquidity against her tokens.
Again, she had to wait for days, as lenders were hesitant to provide loans amid declining prices.
In a peer-to-pool lending service, such delays are virtually eliminated. As long as the collateral remains secure and the platform maintains sufficient liquidity, lenders will feel confident contributing to the protocol. This means Alice can access a loan instantly.
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