NOV 15, 2022 • 13 Min Read
Before the peer-to-pool (P2Pool) money market model became the norm in DeFi, peer-to-peer (P2P) lending was the default design for lending and borrowing. Back in 2018, ETHLend, the predecessor to Aave, facilitated loans where borrowers would have to request their desired interest rate, loan amount, and tenor. Lenders then had the autonomy to choose exactly which borrowers they would choose to fund.
Gradually, money markets began to shift to the peer-to-pool model, where lenders deposit their liquidity in a common pool and borrowers are able to obtain a loan from that liquidity pool made up of individual depositors. The P2Pool model provides more flexibility and ready liquidity. Lenders can withdraw their deposits anytime as long as there is sufficient capital in the pool, and borrowers can repay their loans anytime. The borrow amount isn’t dictated by a single l
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