Thanks to Brendan Forster of Dharma, Robert Leshner of Compound, Nik Kunkel of MakerDAO, Antonio Juliano of dYdX, Varun Deshpande of Nuo, and Emilio Frangella of AAVE for input on their respective sections.
Presented here is a description of prominent DeFi lending protocols and a framework for understanding the degree of decentralization of each. This framework attempts to understand lending protocols as they currently exist in a practical sense and as they are currently used. It has been said that a system is only as decentralized as its most central component, and while there is some truth to this, decentralization exists on a continuum. This article will enumerate the different DeFi lending protocols, describe their function, then assign them a place on the decentralization continuum.