Pinjam pushes DeFi into its next natural evolution
The traditional banking system started with bartering, which eventually evolved into trading with silver & gold coins.
As commerce grew, people needed a safe place to store their coins --- otherwise, it would be easy to rummage through someone's house and steal all their gold coins while they were out!
So the first form of banks came along and told everyone they would securely keep their coins for them, for a fee! This was Full Reserve Banking - where people pay banks to securely keep their coins for them.
Eventually, these early bankers realized, not everyone needed their money at all times.
They asked themselves:
"Why don't we lend it out to those who need it and we can charge interest on those loans?"
Just like that, Fractional Reserve Banking was born.
This is where the Pinjam protocol is taking DeFi.
By implementing this concept, the Pinjam protocol can earn more yield from allocating unborrowed funds to battle-tested protocols and pay depositors a higher and more productive yield.
All this without some over-the-top Ponzinomic model. #realyield
With existing lending protocols today, users will deposit their funds into Aave and BENQI but based on data from dune analytics only at most, 60% of those will be borrowed --- while the remaining 40% sits idly in the contracts not being productive.
Just like those early bankers, Pinjam realized that not all user funds are 100% utilized.
Thus, the Pinjam protocol was born!
This pushes DeFi lending to its next natural evolution of being Liquidity Aggregators.
However, unlike traditional banks that loan out to other banks who then take unknown risks or leverage, Pinjam will be fully on-chain and putting idle liquidity into other blue-chip base-layer protocols such as Aave and BENQI.
On-chain Frational Reserve Banking have the benefits of higher yield and capital productivity with full transparency of how the idle funds are utilized while minimizing the traditional risks of unknown counter-party risks, the ones that makes economies and banks go #bust!