Bittime -DeF ilending industryis sluggish due in large part to complex multi-asset lending pools. Delphi Digital's latest report investigates the potential of a new type of loan product, namely modular loans, revealing its features, design and impact.

DeFi Lending Conditions

DeFi lending protocols are back in business with lending volumes increasing nearly 250% year-on-year, for example from $3.3 billion in the first quarter of 2023 to $11.5 billion in the first quarter of 2024.

At the same time, the need to include more long-tail assets as collateral increases. However, adding new assets significantly increases the risk of the asset pool, preventing lending protocols from supporting more collateral assets.

To manage additional risks, loan agreements require risk management tools such as deposit/loan limits, conservative loan-to-asset-value (LTV) ratios, and high liquidity penalties.

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While isolated loan pools provide flexibility in asset selection, they suffer from liquidity dispersion and capital inefficiencies.

DeFi lending is recovering from innovation, moving from pure “permissionless” lending to “modular” lending. “Modular” loans serve a broader asset base and allow for customized risk exposure.

The essence of the modular lending platform is:

• Basic layer processing functions and logic
• Abstraction and aggregation layers ensure easy-to-use access to protocol functionality without adding complexity

The goal of a modular lending platform is: a base layer primitive with a modular architecture that emphasizes flexibility, adaptability, and drives end-user-centric product innovation.

Major Players in Modular Lending: Morpho and Euler

In the transition to modular lending, there are two main protocols to pay attention to: Morpho Labs and Euler Finance. The unique features of these two protocols will be highlighted below.

We will discuss the considerations, all the unique features, improvements, and conditions necessary for modular lending to surpass the DeFi money market.

Morpho: Modular Loan Marketplace Aggregator

Initially launched as a lending protocol enhancer, Morpho has managed to become the third largest lending platform on Ethereum with over $1 billion in deposits.

Morpho's solution for developing the modular lending market consists of two separate products: Morpho Blue and MetaMorpho.

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Morpho Liquidity Amplification

Before Morpho Blue, fragmented liquidity was a major criticism of the isolated lending market. However, the Morpho team solved this challenge through aggregation at the loan pool and vault level.

Conclusion

Modular lending is emerging as a promising solution to overcome the limitations of traditional DeFi lending. With a flexible and user-oriented design, Morpho and Euler paves the way for a brighter future for DeFi money markets.

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How to Buy Bitcoin (BTC) on Bittime

You can buy and sell Bitcoin (BTC) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

Bitcoin (BTC) is available on Bittime with the market pair BTC/IDR . To be able to buy BTC/IDR at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.