Innovation 1 : Use Right Delegation

beginning of wevest protocol

Existing Interest Rate Scheme

Current interest rate scheme is to pay interest rate to lender to compensate the limit of lender's capital.

Figure 1 : Interest Rate Structure

The current DeFi lending protocols adopt the old paradigm in which the borrower pays interest on the loan, just like in real finance, the borrower deposits the collateral with the lender, and the lender lends the loan to the borrower. In return, the borrower pays the lender interest on the loan. Thus, the borrower is given the right to own and use the loan, allowing the borrower to use the loan at will.

The great shift of the paradigm

The wevest protocol started from a problematic awareness of the old paradigm that the borrower's interest payment is natural for the loan, which is commonly accepted in real traditional finance and cryptocurrency DeFi. This is because the wevest protocol knows that the root cause of the problems of the centralized real financial system lies in the old paradigm. So, wevest protocol thought that in order to overcome the problems of the centralized financial system and implement a truly decentralized financial system, it is necessary to break this old paradigm and build a new paradigm. Unlike the existing lending projects that follow the old paradigm in DeFi, it is absolutely necessary for the purpose of DeFi to establish a new paradigm without being governed by this old paradigm. Contrary to the old paradigm that the borrower pays interest on the loan, although the borrower does not pay interest on the loan, a great shift must be made in DeFi to a new paradigm where both the borrower and lender can earn more than the old paradigm and thus “win-win” each other. Only then can DeFi achieve the decentralized financial system that DeFi truly pursues. So, for the first time in history, wevest protocol insists on and pursues true innovation of DeFi through the great shift of paradigm from interest payments on loans that have dominated the financial system for a long time to no interest payments on loans.

New Paradigm : Use Right Delegated Interest Rate Structure

Figure 2 : Use Right Delegated Interest Rate Structure

Existing lending protocols inherits the old paradigm of real finance, in which borrowers pay interest on loans. The borrower borrows the loan from the lender using his cryptocurrency as collateral. Then, the borrower pays interest to the lender in return, and the borrower has the right to use the loan at will. However, in the ‘Use Right Delegated Interest Rate Structure’, the borrower does not pay interest on the loan, but the borrower does not have the right to use the loan. The borrower's collateral and loans are sent to the yield farming protocol to generate interest income as a compensation. In addition, the Lender earns greater interest income because the borrower's collateral and his loan together generate interest in yield farming, rather than earning interest income by lending only his own loan to the borrower.

Interest-Free Loan

The new paradigm that DeFi needs to achieve is interest-free lending. Although this new paradigm is impossible in real traditional finance, in cryptocurrency DeFi, a process in which the borrower does not pay interest on the loan is possible. By utilizing the features of cryptocurrency lending, interest farming, and swapping, the great shift of paradigm can be realized. In this new paradigm, the borrower does not pay interest on the loan, and the lender earns more interest than in the old paradigm, a process that is achievable in DeFi. This new paradigm eliminates the problems of brokerage fee, which are problems of the centralized real financial system, and increases the efficiency of capital more than in the old paradigm by allowing both borrowers and lenders to earn more than the income in the old paradigm. So, In DeFi, the old paradigm in which the borrower must pay interest on the loan can be discarded, and a new paradigm can be established called an 'interest-free loan' in which the borrower does not pay interest on the loan. So, for the first time in history, wevest protocol has developed an innovative system that will implement a new paradigm of interest-free lending by making a great shift from the old paradigm in which borrowers pay interest on loans. Through this innovative process, the borrower can borrow a loan with no interest and maturity, even more than the collateral, and the lender can earn more interest than taking out interest on the loan from the borrower.