Loan Made Easy With Decentralized Finance System (DeFi) - JustLend

In traditional finance system (CeFi) loans are difficult to obtain and have high interest rates and this deters people from taking them, which is one of the main issues we have with loans. Additionally, centralized entities like banks or microfinance institutions are in charge of it. In my country, there are businesses referred to as "loaning companies" that lend money to those in need. Although it is supposed to be simpler to obtain loans from loaning companies than from banks, these businesses charge extremely high interest rates on their loans, making it very challenging for borrowers to repay them. At least this is one of the challenges that the majority of borrowers in my face.

Even while it might be challenging for certain people to obtain loans, it can also be challenging for banks and other lending institutions to recoup their money after providing loans to borrowers. Yeah in Nigeria, there are different loaning companies that have become bankruptcy because customers refused to pay back.

But thanks to cryptocurrency, which aims to solve the day-to-day issues that require the involvement of third parties, we may do away with them by adding decentralized alternatives. DeFi, or decentralized finance, is a blockchain-based, smart contract-based system. DeFi can assist with the high interest rate issue because, in my country, people pay more than 25% in interest when trying to pay down loans but only receive less than 8% in interest while saving or giving out loan, meaning that the bank or loaning companies makes more. In addition, the borrower might run away or the companies might need to take legal actions,
and most of the time some falsify collateral documents and obtain loans using them.

This and many other problems crypto tends to solve using decentralised finance system (DeFi). In the case of DeFi, all this challenges banks and borrowers faces is not possible since some DeFi loans require crypto asset collateral before you are approved for the loan; this is due to the usage of smart contracts, which are computer programs that carry out commands when certain criteria are met. You will need a $1300 collateral if you wish to borrow $1000 because the smart contract will deduct that amount from your collateral if you don't make your loan payment as agreed. But because the interest rate is so low, borrowers will need to be more diligent about adhering to their loan repayment contract.

This doesn't requires any middle man as we see in traditional banks, just Internet connection and your decentralized wallet.

You can check out JustLend, a decentralized finance protocol that allows users to borrow loan with low interest.