Understanding Seven Unsecured/Partially Collateralized Lending Protocols in One Article
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Understanding Seven Unsecured/Partially Collateralized Lending Protocols in One Article
Retail investors sparked the first wave of DeFi adoption, and institutional borrowers will begin driving the second wave.
Navigating Web3 tides with focused insightsWritten by: Viktor DeFi
Translated by: TechFlow
Institutional lending is becoming one of the fastest-growing segments in DeFi, and most importantly, you can earn attractive returns on your stablecoins—by lending to these institutions.
This article will introduce seven lending protocols offering uncollateralized loans to capital market participants.
Overview
First, uncollateralized lending isn't a new concept—it's existed for years in TradFi under the term "unsecured loans." However, with DeFi, it’s now more accessible to retail investors, albeit with some risks.
In DeFi, undercollateralized lending refers to loans where the borrower’s collateral is insufficient to cover the loan amount. In the context of institutional lending, collateral typically takes the form of credit scores, identity verification, or bank balances. Crucially, these institutions undergo proper KYC checks and are assigned borrowing limits to protect lenders’ interests.
Still, inherent risks remain, which are clearly outlined in the terms of these platforms.
Retail investors sparked the first wave of DeFi adoption; institutional borrowers will drive the second wave.
Traditionally, such financial instruments in TradFi were reserved for the elite, but DeFi is making participation possible for everyone.
Most importantly, retail investors can now lend directly to capital markets and earn substantial returns on their own stablecoins.
Without further ado, let’s explore some exciting projects pushing the boundaries of lending (listed in no particular order).
1. Maple Finance
Maple Finance is a credit market that provides uncollateralized loans to institutional borrowers while generating yield for lenders.
Built on Ethereum and Solana, Maple is fueling growth for institutions seeking on-chain capital.
Through Maple, lenders gain access to sustainable yields from diversified, blue-chip borrowers. Additionally, the protocol has two governance tokens (MPL and xMPL), enabling token holders to participate in governance and share fee revenues.
2. Clear Protocol
Clear Protocol is a decentralized uncollateralized institutional capital market.
It operates on Ethereum and Polygon.
Through Clear Protocol, top-tier institutions can access funds from a distributed network of lenders without posting collateral. Lenders earn attractive USDC returns, plus additional LP rewards paid in the native CPOOL token.
Most importantly, anyone can stake and withdraw CPOOL rewards at any time.
3. Goldfinch
Goldfinch is a credit protocol that lends to institutions and businesses offering both on-chain and off-chain collateral.
Goldfinch allocates capital to borrowing institutions based on its principle of "trust through consensus."
Investors are categorized as backers and liquidity providers, both earning sustainable investment returns. The protocol also regularly distributes its native token—GFI—to backers.
4. Atlendis
The Atlendis protocol allows corporate entities to borrow from a decentralized pool of lenders without collateral, while generating an NFT representing the loan agreement parameters between lender and borrower.
Additionally, lenders on Atlendis earn rewards even before being matched with a borrower.
5. TrueFi
TrueFi is an uncollateralized lending market that offers loans to institutional investors and delivers sustainable returns to crypto lenders.
Built on Ethereum and Polygon, TrueFi is redefining institutional borrowing.
Lenders can stake USDC, USDT, or TUSD into TrueFi pools to lend to borrowers. Their return comes in the form of high yields and $TRU rewards.
6. Teller
Teller Protocol is a lending market that uses an open-order model.
On Teller, borrowers aren’t limited to top-tier institutions—they can be founders, enterprises, DAOs, protocols, etc.
They recently partnered with Chainlink and DECO to build a proof-of-concept for issuing uncollateralized crypto loans.
7. Zest Protocol
Zest Protocol enables Bitcoin liquidity providers to earn BTC yields via lending pools, extending loans to trusted borrowers in the crypto space. Zest also offers on-chain Bitcoin loans to institutions based on their balance sheets.
We’ve seen DeFi on Ethereum—imagine what it could look like on Bitcoin.
Worth noting: Credora is a lending solution that accelerates credit by facilitating credit assessments and real-time risk monitoring. It provides credit ratings for institutional lending platforms such as Maple, Atlendis, and Clear Protocol.
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