The Advantages of Decentralized Lending

Decentralized lending (DeFi) has significant advantages over traditional lending models, which stem from the economic principles embedded in its design.

• No Intermediaries Needed: Decentralized lending eliminates the role of intermediaries, reducing transaction costs in accordance with Coase's theory of transaction costs. This design improves market efficiency, allowing users to conduct lending operations directly through smart contracts.

• Transparency and Security: All lending transaction records are publicly available on the blockchain, ensuring transaction transparency and user trust, in accordance with Stiglitz's information economics theory, reducing risks associated with information asymmetry.

• Flexibility: Users have the flexibility to choose the loan amount and duration, and can select from various digital assets (including BTC).

• Global Accessibility: Lending pools are open to global users, in accordance with the open economy theory, allowing users worldwide to participate in lending without geographical restrictions, enhancing the transnational mobility of capital.