Alchemix: a new (popular?) structure for DeFi lending

The DeFi lending space on Ethereum has been heavily dominated by the “big three” of MakerDAO, Aave, and Compound — combining for $12.7 billion in outstanding debt. Recently, Venus on Binance Smart Chain has also grown to a comparable $3.7 billion in outstanding borrows.

The general pattern for lending markets is having a supply pool and a borrow pool, each containing some number of accepted assets. Users deposit assets into the supply pool to unlock borrowing power — over-collateralization is required because borrowing is permissionless (no KYC/AML). Interest rate algorithms and risk parameters are determined by token holder governance. For example, an asset such as BTC may unlock 70% of the deposited amount in borrowing power, whereas a more volatile token has a lower threshold e.g. 30%.