Earn 16% APY Lending USDC to Wintermute on Atlendis

Before we get started, this is not a recommendation or endorsement to buy any token mentioned.

Similar to Maple Finance, Atlendis is a new permissionless, non-custodial, undercollateralized DeFi lending protocol on Polygon. In the future, Atlendis will also be decentralized, and hence controlled by a DAO, but keep in mind this is still operated by an early core team that has control over smart contracts. 

Compared with overcollateralized lending protocols such as Aave or Compound, Atlendis is designed to enable borrowers who have passed an application process involving due diligence by the Atlendis team, in order to borrow without posting any collateral upfront. The unsecured nature of the loan exposes lenders to credit risk. So different from Aave and Compound, there is real risk in losing one’s principal if the borrower on Atlendis fails to repay their debt, similar to the contagion we witnessed with 3AC defaulting on loans and then their creditors defaulting on loans. No amount of due diligence can guarantee a loan will be repaid without collateral. However, unsecured loans allow for lenders to take higher risk bets in exchange for potentially higher yields.

During this bear market, you’ve probably noticed how stablecoin lending yields have shrunk as well. In the case of Atlendis, they offer a higher yield by catering to this more nascent use case for “DeFi institutional borrowers” like DAOs, market-makers and venture funds. Atlendis is designed to reward lenders with a yield determined by the market's supply/demand dynamics, meaning lenders have the chance to specify how much they’d be willing to lend and at what rate. This creates an interesting dynamic where borrowers and lenders create an “order book,” allowing both parties to come to an agreement on-chain in terms of