Cardano Ecosystem Grows as Peer-to-Peer Lending to Be Introduced in May

According to the announcement from the AadaFinance project, peer-to-peer lending powered by the Cardano ecosystem is getting ready for the launch of the first version of the protocol in May 2022.

How does the protocol work?

As the loan scheme suggests, the process of borrowing, with the help of Aada’s protocol, is quite similar to solutions based on Ethereum. First of all, the borrower creates a request and deposits collateral into a smart contract.

The lender funds the loan via the smart contract, and both parties receive a non-fungible token that will be used later when the borrower returns his or her collateral.

❓ Peer to peer lending?

‼️ Yes, you heard it right. We will launch the first version (V1) of our protocol in early May 📅

💎More information will seek this week! pic.twitter.com/AlkTrOwcW2

— Aada (@AadaFinance) March 28, 2022

Whenever the requestor no longer needs the funds, he returns the take amount to the borrower and receives his or her collateral back from the smart contract with deducted fees and the non-fungible token, while the lender gets the assets back with accumulated fees and also returns the non-fungible token.

According to CoinMarketCap, the capitalization of the biggest and considerably best lending and borrowing platforms, like Aave, increased largely in 2021 and reached approximately $3 billion.

Cardano market and fundamental growth

Following the recovery of the market, the resumed growth of the DeFi industry and other positive factors, Cardano’s price on the market rallied by more than 35% in the last 10 days, correlating with the network’s TVL that reached $326 million in March.

As the chart on DeFiLIama suggests, a massive increase in TVL began in March as the network entered the third month of the year with only $74 million and then faced a 350% increase. Such a massive inflow of funds is most likely tied to the release of additional products on the network, like Minswap.