The DEX DeversiFi exchange has just obtained a credit line by the third-party collateral using the Aave novel credit delegation scheme as we are reading more in the upcoming blockchain news today.
The DEX DeversiFi received a credit line worth more than $200,000 using Aave’s credit delegation which allows the users to take loans against the collateral by other users. OpenLaw facilitated the lending agreement with ETH-compatible digital contracts. The DeFi lending protocol Aave announced today the first issuance of a credit delegation loan for DeversiFi. The new credit line uses collateral provided by other users seeking to earn additional returns as the agreement was facilitated by the decentralized contract service OpenLaw which set up the terms of recording digital signatures.
The transaction represented the first step to opening up DeFi loans to millions of users without collateral with the huge potential to expand in the near future to expand the market. Credit delegation allowed users to deposit collateral crypto assets in Aave then authorize the loans to be taken against the collateral by the users trusted by the depositor. The two parties will have to sign an agreement provided by OpenLaw and to confirm the details of the loan such as credit limits, use of funds, and repayment terms.
In exchange for allowing borrowers to use collateral, the liquidity providers generate interest in loans taken against the assets that use credit delegation. A user with aTokens which is received in return for depositing collateral in Aave which can enable credit delegation by deploying the credit delegation vault. The latest announcement noted that while smart contract codes for credit delegation were audited by PeckShield, it is still in its experimental phases and the users should proceed with caution. Aave Founder Stani Kulechov said:
“Credit delegation will allow unlocking liquidity from within Aave Protocol across DeFi without the need for collateral. Similarly, credit delegation could be the way to source DeFi liquidity into traditional finance. Unlocking that locked value can increase adoption and usage, which by itself would increase the DeFi space in general.”
The agreement signed gives DeversiFi access to 20 wBTC that are worth more than $236,000 as the DEX exchange released an upgrade to the decentralized lending platform in June that targeted professional traders with self-custodian trading such as support for hardware wallets and privacy protections. DeversiFi used ZK-STARK rollout technology to enable more than 9000 transactions per second.
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