Algorithmic order books could revolutionize DeFi lending by addressing the inefficiencies of the current 'curator' model used by protocols like Morpho and Euler. The existing system, which combines risk definition with loan matching, is criticized for introducing human-driven moral hazards and causing liquidity fragmentation.
A proposed Central Limit Order Book (CLOB) model, inspired by traditional finance, aims to automate loan routing while maintaining lender control over risk parameters. This system would separate risk definition from loan matching, allowing lenders to set their strategies and borrowers to access a unified liquidity pool without the need for human curators.
Algorithmic Order Books Poised to Transform DeFi Lending
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