# How has Credit Been Built On-Chain?

In DeFi, trust in intermediaries is replaced with code. Since 2019, this fundamental shift has led to entrepreneurs building different products to help in building an alternative financial system: 

1. **Peer-to-Peer Credit:** In 2019, ETHLend started the Peer-to-Peer lending mechanisms, which was the first introduction of yields and credit on chain. This enabled users to directly lend out assets to other users without the requirement of a financial institution in between.<br>

2. **Peer-to-Pool Credit:** AAVE, Compound and Maker then introduced the Peer-to-Pool lending, allowing users to lend a pool and the borrow from it using their deposits as collateral.

3. **Rise of Credit segments: As** generalized credit products began to find product-market-fit, specific credit segments emerged:&#x20;
   1. **Real World: F**ocused on using the on-chain models to provide credit in the real world, eg: Maple. &#x20;
   2. **Fixed Rate: H**ere, the interest rate stays the same for the loan’s entire term.&#x20;
   3. **RFQ:** RFQ or Request For Quote, based credit returns to a peer-to-peer mechanism in order to fill borrow rate bids. Morpho Labs pioneered this by building a peer-to-peer layer over existing lending pools or AAVE and Compound
   4. **Recursive Credit (or looping):** To increase capital efficiency, recursive credit focused on borrowing against collateral, then depositing again to borrow more, and repeating the cycle.&#x20;

<figure><img src="/files/PqXceG6nkoiCc6g9VCQK" alt=""><figcaption></figcaption></figure>


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