The emergence of oracle-free lending protocols, such as Ajna, Ethereum Credit Guild, Metastreet's Automated Tranche Maker, and Blur/Paradigm's Blend, has sparked interest in re-building lending in the decentralized finance (DeFi) space. These protocols deviate from traditional models by allowing lenders to evaluate risks and determine collateral requirements without relying on a universal oracle or governance factors. Lenders can choose specific assets as collateral and offer quote assets for borrowing, adjusting terms as asset prices change. A key advantage of oracle-free protocols is that they eliminate the concept of bad debt, as lenders take full responsibility for the solvency of their loans. While integrating with other services can simplify the user experience, the motivations for building on Oracle-free protocols should go beyond recreating existing platforms. Embracing the decentralized nature and flexibility of these protocols opens up new possibilities for the future of lending in DeFi.
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