AAVE is starting native Credit Delegation (CD). Aave depositors can delegate their credit lines. For example, Karen deposits an asset such as USDT to AAVE and delegates her credit line to Chad, who draws funds such as ETH from Aave Protocol. Karen and Chad conclude an agreement between each other on the terms of the loan such as repayment, interest rate and covenants. Open Law is used to sign the agreement, which secures the enforceability of the loan similarly as one would use DocuSign for an agreement. After the agreement is in place, Karen creates the CD Vault smart contract, which allows Karen to set the credit line and currency according to the agreement. Chad can draw the credit via borrow() function and repay via repay(). Open credit line brings flexibility to Chad.
By delegating credit, Karen is able to earn higher undercollateralized lending rates while depositing to AAVE. Chad, on the other hand, is able to source liquidity from AAVE without a collateral. Credit Delegation allows AAVE to scale DeFi TVL into financial debt markets world wide, making DeFi the liquidity backbone for finance. The overall DeFi narrative expands from deposit capital to DeFi to source capital from DeFi.
Imagine the future where all debt liquidity is parked in DeFi, auditable by anyone. Since CD data is on-chain, the credit exposure can be measured and mitigated. AAVE starts the CD concept slowly by on-boarding delegators and borrowers that know each others businesses.
nobody is going to use this - you can do this ALREADY by borrowing from compound/aave and sending to a friend
this is just designed to use buzzwords to pump lend, sad
Tyler Bailey
WE ARE ALL GOING TO MAKE IT
Landon Russell
What are you talking about? Have you been following defi at all? AAVE basically just won the war. This is the killer app. Extend your vision for a moment.
Anthony Thomas
>Imagine the future where all debt liquidity is parked in DeFi ok now i'm shaking
Caleb Williams
This is actually the case too Sad how some anons don't get it yet, the market obviously does
Levi Perez
>nobody will use amazon.com because you can already drive to a bookstore This is the level of your misunderstanding user. Very short-sighted and unimaginative of you. You really don't see the potential of this and what it means for defi and the ecosystem?
How do you figure that? They have more TVL because of yield farming. Functionality-wise they are behind Aave. Aave invented flashloans and now Credit Delegation. Imagine not investing in the literal pioneers of the defi space. What do you think is more likely to happen once the tokenomics paper is released? COMP to $736 or LEND to $1?
Jacob Jones
That's unironically bullshit and low IQ thinking
Luke Jackson
This is huge.
The way lending works now is if I have $1000 I can't feasibly lend it to people, no network, no way to enforce payments, people want to borrow more than $1000, etc. So you deposit it in a bank and they lend it, collect their interest, and pass on a pittance to you if anything at all. Now you can cut out the middle man and collect the interest and we all become banks.
James Cruz
to add, i say "lend" but really what lending is is allocating capital. The banks are powerful because they get to choose where capital goes and what kinds of things get funding. But if AAVE really works, we'll all have so much more control over the flow of capital. so much will be left to execution though.
Tyler Thomas
I figure that because I’ve actually used both. Compound is way easier to use and much sleeker. Simplicity is the best design sometimes man.
I bet you’ve never used either. I’ve taken 5-6 figure loans from both.
Easton Reyes
Why can't you just do that with Compound though?
Luis Morgan
Yes you can, and theres far more demand on Compound and higher yields when you factor in COMP
Leo Moore
Skip the openlaw just need a few guys with muscles and guns to enforce the unsecured loans.
Jackson Jenkins
the difference is it's p2p. instead of depositing it in compound and anyone can borrow, you can choose who you lend to and what terms you want to agree to.
Colton Johnson
Which is mostly useless except for unsupported assets that are hard to find lenders for.
Jose Miller
>I figure that because I’ve actually used both. Compound is way easier to use and much sleeker. kek no it isn't. They literally have the same number of clicks and same level of complexity. Click on Borrow. Enter amount. Broadcast tx. Funds are in your wallet. For payback, do the reverse. Explain how you think Aave is more complex when it comes to borrowing/repaying, when they have an identical UX. >I bet you’ve never used either. I’ve taken 5-6 figure loans from both. Me too. They are literally the same from a UX perspective. This argument just makes it look like you don't know what you are talking about. >Why can't you just do that with Compound though? Other user doesn't know what he is talking about. Yes you COULD borrow funds on Aave/Compound and lend them to your friend, then arrange for the repayment etc. That is not the same thing as building a platform for delegating credit. Short-sighted and unimaginative people think they are exactly the same, but only because they can not adequately comprehend what a permissionless delegated credit system will do for defi. In the same way that you COULD set up a website, sell products, and then deliver them by hand to your customers.... or you could use Fulfilled By Amazon. This is a straight up intelligence test user. If you understand the potential you will see it as a game-changer. If you have a limited understanding of defi, or general lack of imagination, you will mistakenly think it is just the same as compound.
William Rogers
can you do unsecured loans on compound?
Josiah Reed
Buddy, i’m not saying AAVE is useless. I’m saying Compound is going to be the market leader in decentralized lending. It has far more liquidity, higher yields and is easier to use and i’m not going to walk you through that, it is apparently obvious to anybody who tries both.
Cameron Barnes
>I’m saying Compound is going to be the market leader in decentralized lending No that's not what you said. >Compound is way easier to use and much sleeker >Yes you can, and theres far more demand on Compound and higher yields when you factor in COMP You said compound is easier to use (it's not, they are equivalent) and there is no need for delegated lending because someone could use compound to lend privately (which is not the same thing). Both of these things are wrong. >It has far more liquidity, higher yields and is easier to use and i’m not going to walk you through that More liquidity, yes. Higher yields, yes. It is not easier to use and you know it, which is why you are backtracking from that comment. The crux of the matter is you think you can "just do this with compound" which means you have not understood the implications of delegated credit.
Cameron Bell
AAVE will kill Compound by unironically stealing it's tokenomics
