Introduction to the Yield Protocol

Besides decentralized exchanges, decentralized lending is the other category of DeFi service that has taken off recently. Indeed, three of the five top DeFi protocols by total value locked being lending protocols. MakerDAO, Aave, and Compound have a combined total of $2.4 billion in outstanding debt.

The success of lending protocols is largely dependent on the demand for leverage. Users put down some collateral tokens (such as ETH) and take out stablecoins to go long, or to borrow a token to go short.