What is this? Lending protocols are debt markets built on top of a blockchain. Lending protocols are what drives growth within DeFi and allows for anyone to back some form of debt. These lending protocols pool funds together and give people a return based on the demand of the assets being supplied and borrowed. Lending protocols are used by people looking to get a loan on their cryptocurrency.
How Does This Work With Outlet? Lending protocols are integrated within Outlet. When you deposit funds to your Outlet account these funds and supplied to lending protocols via our smart contract. Our smart contract stakes funds with the highest return lending protocol to ensure you are getting the best return on your USD.
Examples: compound.finance, dharma, dy/dx These are arguably the industry leaders. These protocols are products that allow anyone to stake or borrow cryptocurrency in some capacity.
What is this? Stable coins are assets that live on a blockchain that are equal to $1. These stable coins are the backbone of decentralized finance and enable people to maintain a particular value.
How Does This Work With Outlet? Stable coins are critical to Outlet. Stable coins are what your dollars go toward within our mobile application and is what we supply lending protocols with in order to provide our customers a return.
Examples: There are plenty of great stable coin projects. Some of the best projects are Dai, and USDC.
When you deposit funds into Outlet they are turned into a stable coin and supplied to lending protocols to back loans. The loans themselves are collateralized debt. Often called a CDP (Collateralized Debt Position). These CDPs are over collateralized loans. Meaning that If I wanted to borrow $100 in some stable coin I would need to put up more than $100 in assets making them safe loans to back.