Cardano Now Offers New Kind of Lending and Borrowing, Already Live on Testnet

Cardano-based Liqwid Labs has recently shared an exciting announcement on the newly developed peer-2-pool lending and borrowing solution. The new feature is already live on Cardano’s preview testnet.

The new solution utilizes the custom-built Liqwid Smart Contract that ensures custody, escrow and settlement between suppliers and borrowers. The collateral asset is deposited in the smart contract and held there for the protection of the supplier.

peer-2-pool lending & borrowing is live on Cardano’s preview testnet!$ADA $LQ 💧 pic.twitter.com/yqG0WlJcU9

— Liqwid Labs💧 (@liqwidfinance) October 5, 2022

The smart contract is connected to oracle price feeds for determining liquidation levels and utilizing algorithmic interest rates, and it has open APIs.

According to developers, the solution, including market lending and borrowing, an interest rate curve and batching contracts, was deployed to the preview testnest approximately two weeks ago and on the legacy testnet three weeks before that. The public launch is coming in the next few weeks.

The main difference between peer-2-peer lending and borrowing and peer-2-pool is the absence of a human factor. Liqwid’s solution is mostly based on Aave’s peer-2-pool style of lending and borrowing, which means rates are based on the algorithmic supply and demand flow measurements are calculated by the interest rate curve algorithm.

Until the end of the year, Liqwid is aiming at the public launch on the Cardano mainnet if the testing and audit goes according to plan.

Liqwid is just part of Cardano’s rapidly developing decentralized finance industry. Unfortunately, due to limitations in the UTxO mechanism, developers had to come up with alternative ways of bookkeeping transactions, which is why the blossoming of DeFi solutions on the network came in much later than on alternative account-based networks like Ethereum or Solana.