Lending Protocol Ecosystem

Despite the recent increasing market share of various pair-based lending protocols (Morpho Blue, Fluid, Fraxlend, etc.), they still face issues with liquidity fragmentation and capital inefficiency due to the lack of collateral asset utilization.

Meanwhile, pool-based lending protocols (Aave, Compound, Venus, etc.) still dominate over 95% of the overall lending protocol ecosystem. This market structure is unlikely to change easily, and pool-based lending protocols are expected to remain dominant for a long time.

While we use pool-based lending protocols without critical issues, it's worth questioning if they are the best option. Could there be room for improvement? We think so!