What is DeFi Lending and How Does Commodo Finance Bring This Element To Cosmos Ecosystem?

Aniel Essien
5 min readJan 23, 2023

After a long wait and series of testing, Commodo was launched on mainnet on January 7th, 2023.

DeFi, in general, has played a very vital role in the implementation of Blockchain and strengthening its prospects. The growth of Decentralized Finance (DeFi) has brought about several financial apps on the blockchain. These dApps take the shape and structure of different areas in Traditional finance, except, this time, they are decentralized.

With how fast-growing the blockchain industry is, leading to massive adoption around the world, DeFi is practically following suit. This is because DeFi makes up the bulk of Blockchain. Before NFTs, Gamefi, Metaverse, etc, there is DeFi. DeFi is the pathway that connects us to other sectors in the Crypto industry.

Over $20 billion is locked in DeFi protocols and this proves that DeFi applications have gained popularity over the years creating a big crypto market boom that even the bear market can not completely usurp.

One of the sectors of DeFi is DeFi Lending, which has also experienced tremendous growth since it was introduced. Just like mortgage banks and lending brokers are to Traditional Finance, DeFi lending is the same in DeFi.

As an upsurging part of the crypto industry, DeFi lending enables crypto holders to either lend their assets and earn lucrative interests or borrow tokens to engage in other DeFi activities like staking, farming, LPing, etc, to grow their portfolio.

In simple terms, DeFi lending is all about offering crypto loans on a decentralized platform, and among all the dApps, DeFi has the highest lending growth rate globally. It is one of the prominent contributors utilized for locking crypto assets.

Now, if you are curious about Commodo Finance, you may want to understand how DeFi Lending works.

The DeFi Lending Process

DeFi defies the structures of traditional finance, enabling an ecosystem where users can be in charge of their funds and use them for financial activities without any intermediaries. It is an open-source, permissionless, and transparent financial environment. The same goes for DeFi lending.

As stated earlier in this article, Decentralized Finance (DeFi) Lending is quite similar to the traditional lending service offered by the banks, except that the power to borrow lies in the hands of crypto holders.

The lending dApps are the platforms through which the transactions take place. They help people borrow and lend funds which allow the crypto holders to earn a substantial income.

The process of DeFi lending is simple and operates a trustless and open-source approach. Users lock their crypto assets on the DeFi lending platform without worrying about intermediaries and borrowers coming in to take these loans from the platforms. While borrowers pay interest, lenders receive interest.

DeFi lending mainly relies on lending pools where the users can add their assets to the lending pool and the lending platforms can ensure quick distribution among borrowers through smart contracts.

Cosmos DeFi Lending

Cosmos is one of the blockchain networks with exponential growth. This chain has set a pace in the industry and fast became one of the major chains to reckon with between 2021 to 2022.

Cosmos is a chain network on which other parachains are built, called “hubs”. It has also witnessed the emergence of a variety of new protocols and hubs that puts it among the fastest-growing ecosystems in space.

Although the Cosmos ecosystem flourishes with several DeFi platforms, a vital element had been lacking; DeFi Lending. Although there had been Kava, that was all there was to it. 2022 grew Cosmos lending ecosystem with Umee and a more uphill and enhanced protocol by Comdex, Commodo Finance.

Comdex was declared the DeFi infrastructural layer for Cosmos in 2022, circling its advantageous position and the variety of DeFi protocols it was introducing into the ecosystem creating increased adoption.

In a bid to fill this position without wanting, Comdex introduced Commodo DeFi lending. This is among several other protocols and financial services launched and yet to be launched by Comdex.

Let’s take a quick dive into Commodo Finance.

Commodo Finance: The DeFi Lending and Borrowing Platform on Cosmos.

Commodo is a decentralized and collateralized IBC-native lending and borrowing platform that uses the Lend module, which exists exclusively on the Comdex-1 chain.

The platform was an early ideation of Comdex, contained in Comdex’s updated roadmap for 2022 released in 2021. Its testnet was launched in September 2022 and finally, on 7th January 2023, the platform was launched on the Mainnet and open to all users.

The goal of Commodo is to provide a lending and borrowing protocol that is easy to use, secure, and very liquid, which would enable IBC asset holders the chance at generating passive income.

Lenders (depositors) lend their assets and receive yields on them through interest rates. On the other hand, borrowers will be able to borrow assets in cPools by keeping their lent assets as collateral, subject to dynamic interest rates.

The utilization of the assets in the cPools determines their interest rates.

cPools means asset pools where users deposit their Commodo whitelisted assets as Lent Assets and/or from which users can effect borrowing of the whitelisted assets.

But Commodo will not stop at IBC. In the future, the lending platform will also support other ecosystems, synthetics assets, and other digital assets and allow them to be plugged into its earning mechanisms.

About Comdex

Comdex is a decentralized network and IBC-enabled DeFi infrastructural layer built on the Cosmos blockchain.

This network provides several interoperable plug-and-play core modules which developers can utilize to create and deliver their DeFi protocols thereby adding more utilities to the Cosmos ecosystem.

For more insights, follow the Comdex network via the following links.

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