Top 8 DeFi Lending & Borrowing Protocols
Lending and borrowing protocols represent one of the most foundational innovations in DeFi. These protocols enable anyone to lend their cryptocurrency assets to earn interest or borrow funds against their crypto holdings—all without traditional banks or financial intermediaries and with full transparency.
Top Lending & Borrowing Protocols
Aave — The largest DeFi lending protocol. Known for launching GHO, its native decentralized stablecoin. Fees are accumulated in the treasury. Recently proposed a “fee switch” for AAVE token buybacks.
Morpho — Currently operates without charging fees, though governance retains the ability to activate fee mechanisms in the future.
Compound — A pioneer in DeFi lending. Last year, governance propose implementing a fee switch, allocating 30% of protocol reserves to staked COMP holders.
SparkLend — A stablecoin-focused lending market governed by SPK token holders. Fees flow to a treasury controlled by governance, which can initiate proposals.
Kamino — Solana’s largest lending protocol with integrated automated liquidity management. Protocol fees go to a governance-controlled treasury.
Venus — A multi-chain lending protocol with a leading position on the BNB chain. Fee distribution: 20% of funds go to XVS buybacks, vault rewards, the treasury, a risk fund, and BNB burns.
Euler — A protocol featuring innovative Fee Flow auctions, where EUL holders bid on accumulated protocol fees. This mechanism converts diverse revenue streams into EUL tokens for the DAO treasury.
Fluid — A multi-protocol DeFi platform with limited publicly available information on fee allocation. The protocol appears to implement governance-controlled fee structures.
Most of the protocols enable users to lend “blue chips,” native blockchain coins, well-known wrapped assets, and reliable LP assets. Some specialize in stablecoins only, allowing users to borrow only the most capitalized assets, while others enable lending and borrowing of high-risk assets.
Protocol Comparison Table
Not under review: Maple (mostly institutional), JustLend (not familiar with TRON blockchain), protocols under $1B TVL.
Beginner-Friendly DeFi Lending Strategy
1. Lending stablecoins
For crypto beginners, lending stablecoins is one of the most reliable ways to earn steady passive income. Depending on your choice of stablecoin, it can generate income of 3–12% APR.
2. Lending crypto assets
A perfect opportunity to earn additional passive income on your crypto, comparable to staking. It works well if you plan to hold long-term. And there’s even more—you can take the next step:
3. Borrow against your loan
Crypto has always offered opportunities for income on stablecoins—ICOs, Vaults, early PointFi programs, etc.
For example, I’ve been thinking about participating in a PointFi activity. On one hand, I don’t want to sell my assets; on the other, I don’t have additional funds to use. So I lend my BTC and borrow stablecoins (USDC). That helps me avoid missing the opportunity.
4. Looping
You can read about this method—which can help you increase the income from your lending—on my Telegram channel. Here’s the link to the post: link
Conclusion
! Don’t forget to monitor your collateral ratio — otherwise, your collateral may be liquidated !
Dune Dashboards
- Morpho — https://dune.com/morpho
- Venus — https://dune.com/xvslove_team/venus-protocol-dashboard
- Fluid — https://dune.com/tobyleung/fluid
- Euler (deprecated) — https://dune.com/shippooordao/Euler-Finance-Dashboard