Decentralized finance (DeFi) is a rapidly growing sector of the blockchain ecosystem that is transforming the way we think about financial instruments and services. DeFi offers a wide range of innovative financial products and services, including lending, borrowing, spot trading, margin trading, and flash loans, that are accessible to anyone with an internet connection and a digital wallet.
One of the key benefits of DeFi is that it allows end users to access financial instruments and services quickly and easily, without the need for complex onboarding processes or the submission of personal documents such as passports or background checks. This makes DeFi an attractive alternative to traditional banking systems, which can be slow, costly, and inconvenient.
In this tutorial, you will learn how to create a DeFi platform that enables users to lend and borrow digital assets from each other. The platform you will build will be powered by a blockchain, which provides a decentralized and immutable record of all transactions. This ensures that the platform is transparent, secure, and resistant to fraud.
A loan is a financial transaction in which one party, the borrower, receives a certain amount of assets, such as money or digital tokens, and agrees to pay back the loan amount plus a fee to the lender by a predetermined deadline. To secure the loan, the borrower provides collateral, which may be seized by the lender if the borrower fails to pay back the loan as agreed.
A loan has several properties that define its terms and conditions.
id is a unique identifier that is used to identify the loan on a
amount is the amount of assets that are being lent to the borrower.
fee is the cost that the borrower must pay to the lender for the loan.
collateral is the asset or assets that the borrower provides to the lender
as security for the loan.
deadline is the date by which the borrower must pay back the loan. If the
borrower fails to pay back the loan by the deadline, the lender may choose to
liquidate the loan and seize the collateral.
state of a loan describes the current status of the loan and can take on
several values, such as
liquidated. A loan is in the
requested state when the borrower first submits
a request for the loan. If the lender approves the request, the loan moves to
approved state. When the borrower repays the loan, the loan moves to the
paid state. If the borrower cancels the loan before it is approved, the loan
moves to the
cancelled state. If the borrower is unable to pay back the loan
by the deadline, the lender may choose to liquidate the loan and seize the
collateral. In this case, the loan moves to the
In a loan transaction, there are two parties involved: the borrower and the lender. The borrower is the party that requests the loan and agrees to pay back the loan amount plus a fee to the lender by a predetermined deadline. The lender is the party that approves the loan request and provides the borrower with the loan amount.
As a borrower, you should be able to perform several actions on the loan platform. These actions may include:
- requesting a loan,
- canceling a loan,
- repaying a loan.
Requesting a loan allows you to specify the terms and conditions of the loan, including the amount, the fee, the collateral, and the deadline for repayment. If you cancel a loan, you can withdraw your request for the loan before it is approved or funded. Repaying a loan allows you to pay back the loan amount plus the fee to the lender in accordance with the loan terms.
As a lender, you should be able to perform two actions on the platform:
- approving a loan
- liquidating a loan.
Approving a loan allows you to accept the terms and conditions of the loan and send the loan amount to the borrower. Liquidating a loan allows the lender to seize the collateral if you are unable to pay back the loan by the deadline.
By performing these actions, lenders and borrowers can interact with each other and facilitate the lending and borrowing of digital assets on the platform. The platform enables users to access financial instruments and services that allow them to manage their assets and achieve their financial goals in a secure and transparent manner.