CRYPTO61120 - Decentralised Finance: Lending and staking: Meaning of 鈥榣oan鈥� and 鈥榮taking鈥�
皇冠体育app activities of lending and staking have been particularly popular uses of Decentralised Finance (DeFi). It should be noted that there鈥檚 no statutory or legal meaning of the terms 鈥榣ending鈥� and 鈥榮taking鈥� in this context. 皇冠体育app lending and staking section of guidance (CRYPTO61000) applies to two types of transaction:
A person (鈥渓ender鈥�) transfers the control of tokens to another person (鈥渂orrower鈥�). At the time that transfer occurs, the lender acquires a right to demand that the borrower transfers to the lender the control of an equivalent quantity of tokens at a time in the future to satisfy the loan.
A person (鈥渓iquidity provider鈥�) transfers the control of tokens to a DeFi lending platform. This type of transaction may be termed 鈥渟taking鈥� or 鈥減roviding liquidity鈥�. At the time when the transfer occurs, the DeFi lending platform transfers control of one or more different tokens to the liquidity provider.
皇冠体育app DeFi lending platform has the ability to transfer the control of tokens provided to it by the liquidity provider to other persons (鈥渂orrowers鈥�). It will normally do so on terms that mean the borrower has to provide a return to the DeFi lending platform in excess of the quantity of tokens that the borrower initially received. This return, or a part of it, will be passed onto the liquidity provider as their compensation for providing the liquidity to the DeFi lending platform.