Since April, starting from VIRES, many loan agreements have exploded. In May, BLIZZ and VENUS were even brought up by LUNA. SCREAM on FTM also cracked. Recently, SOLEND, a well-known loan agreement on SOLANA, has also fallen into trouble. In the account of the turmoil, the well-known KOL raccoon once wrote in his article: Overview of the risk of loan agreements, those eyebrows you didn't pay attention to https://bit.ly/3N0Imrj said that today's market is tragic, the FOMO mood has decreased, and many people Aggressive tactics have also turned conservative, so seek an incense mine. In this turbulent day, where should the lending sector go? The author intends to analyze the problems encountered in the lending sector and traditional banking business, and find out the possible path for on-chain lending in the future.

The six major risks mentioned in the famous KOL little raccoon article are 1. Oracle 2. Small coin LTV 3. Public chain 4. Liquidation mechanism 5. Liquidity management risk 6. Contract risk

In the bank, these risks are not the same, but many principles can be interoperable, such as the oracle machine problem, the liquidation mechanism and the small currency LTV problem, in the bank, it is the problem of collateral pricing, collateral redemption mechanism and mortgage rate setting question. In Taiwan, only real estate is given a relatively high mortgage rate, and the pricing is handled by appraisers. Although real estate is not as liquid as BTC and has high transaction friction costs, the volatility is relatively low, and the market depth is extremely deep. It is difficult for any major real estate owner to drop the price of the whole Taiwan alone. It is very difficult to borrow for factories and machinery, the interest rate is high and the mortgage rate is low, and the depreciation of the collateral for the equipment type is very high. Generally, banks rarely accept mortgage loans of stock securities. Generally, stock financing is carried out by securities companies. Only Fubon and Cathay Pacific can accept the bank part. For securities financing, the interest rate is not low, and the market price is always beating, and the frequency of liquidation is much higher than that of real estate mortgages.

The difference mentioned above is not the biggest difference between banks and on-chain lending. The biggest difference is that there is no credit lending system on the chain. There is no credit on the chain, and there is no operational credit or identity verification system. I am not advocating the chain. Real-name verification is required for both on-chain and off-chain identities. Everyone can create hundreds of wallets at any time, and old wallets can also be discarded. Most people are afraid that their real identities, which have been exposed for decades, will stink or be punished by law. However, there is neither a decentralized sanctions institution nor any public opinion pressure on the chain, so the feasibility of credit lending becomes very low. Since a quotation oracle like LINK can appear, is it possible for a decentralized credit system to become a possibility? What? For example, a weighted score is given based on a comprehensive consideration of the active time and degree of an address, but the inability to enforce the law is also a difficult point. Can major exchanges and DEFI institutions combine to form an arbitration organization, and the malicious addresses will directly arbitrate the black list and cannot be realized ?

In addition, the interest rate model that the interest rate of the lending mechanism increases with the increase of utilization rate is very interesting, but with recent events, it can be found that no matter how high the interest rate is when encountering panic and runs, no one dares to save money, because this is the Distrust of platform systems. Confidence crisis, the banking system has also suffered from this problem for a long time, many users think that their bed is much safer than the bank, and then the banking system is to set up deposit insurance, and it is not up to the user to choose whether to add insurance or not. Instead, it is insured by default when making a deposit. The important point of this mechanism is that users are greedy. Therefore, if the depository is free to choose whether to participate, most people will not participate. Later people have no more motivation to join. For details, you can see how many users received insurance compensation when ANCHOR exploded. Such a deposit and preservation mechanism is very effective internationally, and it is far more difficult to implement than my whimsical credit and law enforcement system in the previous paragraph. Much simpler.

The above is probably my relatively superficial idea. It is not that I am not optimistic about the development of blockchain. Block training solves many problems that cannot be solved by traditional models. However, sometimes traditional solutions may be used in traditional solutions. It has the effect of throwing bricks and attracting jade.

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