Defi projects like Maker, Compound or Ethlend gained significant user adoption lately. Speculators entered the market in the hopes that the bear market of 2018 has finally come to an end. This resulted in many crypto lending platforms to experience an increased demand in borrowing interest, which is certainly a good thing for the wider ecosystem, but also came with significant problems, especially for the MakerDAO system. Increased demand in CDPs resulted in excess Dai being issued in a short period of time, leading to Dai trading below its peg for several months in a row. Having imposed an interest rate of 0.5 % in December, the MakerDao governance body saw themselves forced to increase their interest rate up to 3.5% by March 2019.
For a lot of investors & regular consumers that borrowed money, such sudden spikes in interest rates are not sustainable. Incomes Ethlend, which offers p2p loans at fixed rates, solving exactly this problem. To enable users a smooth transition between Makers volatile CDP system and EThlends stable interest environment, I aimed to develop Collateralized, a system which enables you to automatically transfer your MakerDAO CDP collateral to the ethlend platform and refinance their loan to avoid interest payment fluctuations.
What it does
Collateralized identifies your CDP, wipes all debt, pays all fees and takes the collateralized ETH and transfers it to the ETHLend platform to create a fixed p2p loan agreement with another party.
How I built it
I mostly used Makers Dai.js and Aaeves Aaeve.js library and tried to connect the two.
Challenges I ran into
Mostly in regards to the documentation that had a lot of small issues which delayed the implementation significantly.
Accomplishments that I'm proud of
Being able to create, fund, wipe and destroy CDPs automatically and issue ETHLend loans with the collateral
What I learned
Libraries don't always work. Liquidity is key. Decentralized lending is awesome!
What's next for Collateralized
1) A user-facing interface enabling non-technical users to also enjoy the application. 2) Enabling Ethlend users to exchange their fixed loan for a variable MakerDAO CDP.