A Lending Renaissance

This report was originally published as an Enterprise tier report on Mar 12, 2024

Key Insights

• Gearbox presents 50% upside by tackling the deficiencies in existing DeFi lending protocols. This presents an opportunity to seize market share and foster overall market growth.
• Integrations with Liquid Restaking Tokens (LRT) have been a driving force behind the growth of undercollateralized lending protocols. In a bullish market, this momentum is expected to persist, fueled by further LRT adoption, tokenized carry trades, and a growth in yield farming.
• While growth constraints exist for undercollateralized lending, they are somewhat overstated.

Introduction to Onchain Lending

DeFi seems to have faded into the background of the crypto landscape, as investors divert their allocations towards more appealing opportunities. We argue that it's time for investors to reconsider DeFi, especially by exploring innovative protocols and designs that could challenge incumbents in well-established markets. While it may not be revolutionary, these new DeFi protocols present an enticing chance to invest in lower-valued products capable of capturing market share from established players and introducing optimizations to reignite growth in the DeFi space. While a full-blown DeFi summer may not be imminent, there could be a hint of spring in the air.