Bigger Than Prediction Markets — Lending with @poly_lend $POLYLEND From Feb 2019 to Nov 2021, DeFi TVL grew by a jaw-dropping 730x — from $230M to $168B. Two major DeFi categories, DEXs and Lending Protocols, accumulated a large share of that liquidity. Each had its clear winner: Uniswap (current TVL: $5.4B) and Aave (current TVL: $38B). Surprisingly, Aave — a lending protocol — grew 7x larger than Uniswap, the marketplace. Lending protocols naturally attract more static liquidity since there’s always more capital seeking low-risk yield. Like a savings account, users deposit and forget. If history is any guide, we’ll likely see a similar dynamic emerge in prediction markets — with a few industry-specific differences. From Blend to PolyLend It all started in May 2023 when @paradigm released a paper "Blend: Perpetual Lending with NFT Collateral" — a groundbreaking lending protocol that reshaped NFT finance. In June 2024, almost a year later, @Polymarket published an article and a proof-of-concept codebase inspired by Blend: "PolyLend — a peer-to-peer lending protocol allowing users to borrow USDC against conditional token positions". Polymarket made it clear they wouldn’t implement it themselves but hoped the community would find it useful. Fast forward to October 2025 — @poly_lend picked up the torch and decided to turn the concept into a real platform. What a timeline! The Chad Team PolyLend team’s devotion is unmatched. Instead of pocketing their first $4K in creator fees, they spent it on buying a .com domain, upgrading from .cc to align with From a technical standpoint, implementing Blend/PolyLend style lending is no joke — it requires deep Solidity and protocol experience. Their GitHub is public, and since the project launch they’ve been shipping steadily: Core Features That Make PolyLend Special 1. Peer-to-peer – loans are matched individually between borrowers and lenders, allowing precise risk assessment for each market. 2. No Expiries – loans have no fixed term and automatically roll as long as lenders remain, removing the need for manual renewals or expiry-based liquidations. 3. Liquidatable – a lender can start a 24-hour refinancing auction anytime. If the auction finds no new lender, the collateral is transferred to the lender; borrowers can repay anytime to reclaim collateral. 4. No oracles – PolyLend eliminates oracle risk by letting lenders and borrowers set rates directly. Although PolyLend's current UI is still in development, you can already interact with the deployed testnet smart contracts in this UI alpha version: Lender Types There are three main lender profiles that will likely emerge on PolyLend: 1. The first are existing prediction market traders who want lower-risk returns. For example, say you’re actively trading the 2028 U.S. presidential election. You might lend money against Vance becoming President, given the market is long-tail and you don’t expect his probability to drop much over the next year. If you lend $1,000 against a "Yes" position worth $2,000, you’ve got a 50% cushion — enough to generate a solid APR with manageable risk. 2. Yield Farmers who don’t trade prediction markets but want passive returns. Expect specialized new builders to launch yield vaults that manage risk — similar to Hyperliquid Vaults. 3. Sophisticated Lenders – prop firms and hedge funds that assess risks algorithmically and use their own capital. This makes PolyLend a core infrastructure layer for prediction markets and future builders. Aave’s success was built on the efficiency of concentrating liquidity in one place — deeper markets create better rates, which attract more borrowers, which then attract more lenders. The same flywheel can happen in prediction markets. Leveraged Trading The biggest unlock for PolyLend is leveraged trading. PolyLend plans to integrate with other terminal builders — becoming the core infra layer powering leverage across prediction markets. By borrowing against conditional token positions, traders can amplify their exposure — using borrowed USDC to re-enter the same market. They can loop this process multiple times, effectively stacking leverage at minimal additional cost. As long as their total position grows enough to cover the interest, profits are multiplied. Buy Now, Pay Later PolyLend also plans to introduce a "Buy Now, Pay Later" feature — similar to paying a mortgage. Instead of paying for a position in full, users can make a smaller upfront payment and repay the rest over time. The down payment is flexible — pay more now for lower interest, or pay less and accept higher rates. It’s a simple but powerful way to make prediction markets more accessible — letting anyone take positions they believe in without committing all capital upfront. V2: Basket Lending PolyLend's team has mentioned that their V2 will introduce loans backed by baskets of positions — reducing the risk of liquidation from any single market. It’s more complex for lenders to price, but it’s the logical evolution of the protocol. The right mental model for PolyLend is infrastructure. Sophisticated lenders will assess risk algorithmically or build user-friendly vaults for passive depositors who just want yield. Basket-based lending first appeared as a concept at the @a16z 10² Hackathon, but that team has no intention of turning their concept into a startup. Final Thoughts As I've written before, prediction markets might be the first crypto category that doesn't have bear or bull cycles. My thesis is that apps built on top of prediction markets that find PMF will grow their TVL and user base sustainably, regardless of overall market conditions. 🤝