In classic finance, applying for a loan remains a difficult and cumbersome practice. Novel protocol ADALend leverages Cardano's smart contracts to offset the gap between the lending segment and blockchain technology.
ADALend eases lending operations with liquidity pools
The design of ADALend, one of the first decentralized lending/borrowing protocols on the largest proof-of-stake (PoS) network, Cardano, allows its clients to get a loan using liquidity pools.
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Liquidity providers can earn "share tokens" for locking their idle liquidity in liquidity pools in accordance with pre-determined APY rates. To redeem value from liquidity pools, lenders convert share tokens into the underlying assets of the pools. When underlying tokens grow in value, the price of share tokens also increases.
Then, when a lender is ready to repay the loan, he/she sends the money back to the liquidity ecosystem of ADALend. It, in turn, distributes the money and interest accrued between the borrowers (liquidity providers).
As the number of lenders and amount of loans may vary, the APY structure and exact lending specifications are subject to change.
Bringing multi-layered security to lending protocols on Cardano
Ensuring maximum security and anonymity for all of its clients is the first priority for ADALend's development progress. As such, it incorporates multiple monitoring mechanisms to track the health and security of the protocol.
The platform has already implemented internal and external oracles. The decentralized oracle mechanisms will ensure the stability of prices on all liquidity pools. As such, no malefactor will be able to perform a flash loan attack against ADALend and siphon the liquidity out of it.
Other elements of the protocol's architecture (decentralized health monitors, liquidation bots) are also designed to prevent ADALend's pools from attacks and manipulations.
As covered by U.Today previously, ADALend secured $540,000 in seed funding from top VCs and angel investors. For this round, the protocol unlocked 1,800,000 ADAL tokens minted on Cardano (ADA) blockchain.
The round was closed with 5x oversubscription in a matter of hours. Right now, the protocol invites investors to take part in a whitelist registration for a private round via email address email@example.com.