IronLend is an algorithmic money market system designed for a completely decentralized finance-based lending and credit system on the Polygon Network. IronLend creates money markets for assets on the Polygon network that will allow users to become suppliers and borrowers.
IronLend offers users a simple way to earn interest on their assets without having to negotiate with a counterparty and the protocol is decentralized, permissionless, transparent, and non-custodial.
A money market refers to the trading of short-term debt investments. It is characterized by a fairly high degree of safety and low rates of return. The purpose of a money market is to connect depositors and borrowers.
In the context of blockchain assets, two major flaws exist today:
  • Borrowing mechanisms are extremely limited, which contributes to mispriced assets (e.g. “scam coins” with unfathomable valuations, because there’s no way to short them).
  • Blockchain assets have a negative yield, resulting from significant storage costs and risks (both on-exchange and off-exchange), without natural interest rates to offset those costs. This contributes to volatility, as holding is disincentivized.
In contrast, centralized exchanges allow margin trading (aka a “borrowing” market), but the system is trust-based and not permissionless. Furthermore, the assets you receive are virtual, meaning that you cannot move a position. Your borrowed assets cannot interact with other dApps. This contributes to capital inefficiency.
Smart contract-based money markets solve these issues by enabling frictionless borrowing of assets without the flaws of centralized margin trading, while providing a yield-generating approach to storing assets safely.
References from Compound 2019 Whitepaper
Last modified 3mo ago
Copy link