# Orbit: Revolutionizing DeFi with Undercollateralized Borrowing By [kaukushikmar](https://paragraph.com/@kaukushikmar) ยท 2023-04-05 --- The last few weeks in Eth India fellowship were focused on the project building phase. During this time, fellows were given the opportunity to apply the skills they had learned in the earlier phases of the program to develop their own projects. Mentors were available to provide guidance and support as needed. The project building phase was an intense and rewarding experience for fellows, as they were able to bring their ideas to life and gain hands-on experience in blockchain and smart contract development. The program provided the necessary resources and support for fellows to create their own projects and make meaningful contributions to the Web3 ecosystem. My project was Orbit, a DeFi protocol that introduces secure undercollateralized borrowing. This means that borrowers can obtain loans without having to put up collateral equal to the full value of the loan. This opens up new use cases for borrowing in DeFi and increases the capital efficiency of supplied assets, optimizing rates for both lenders and borrowers. Orbit has three markets: the Lenders market, the Under-collateralized market, and the Over-collateralized market. The Lenders market is an easy-to-use market for lenders. Users can deposit their assets to Orbit's liquidity pool and earn yields. The Under-collateralized market enables users to get under-collateralized loans, opening up new use cases of borrowing in DeFi. It also increases the capital efficiency of the common liquidity pool, optimizing the rate of the whole system. The Over-collateralized market is similar to existing credit protocols in DeFi. Borrowers will have to lock collateral of more value than their debt. The under-collateralized market optimizes rates of the overall system, making this market more efficient compared to existing over-collateralized credit protocols. The current credit protocols have an average utilization of around 35% for the top borrowed assets, which implies that approximately 65% of assets are sitting idle in the pool. It leads to low supply rates, which decreases the incentive for lenders to supply in the liquidity pool, causing a liquidity crunch. In the current interest rate models, utilized by the DeFi credit protocols, the supply rate is a product of the borrow rate and current utilization of the market (not considering protocol fee), and utilization is the problem that causes lower supply rates in current credit protocols. Orbit solves this problem by introducing undercollateralized borrowing, which increases the capital efficiency of supplied assets and optimizes rates for both lenders and borrowers. It opens up new use cases for borrowing in DeFi, making it more accessible to the masses. The last few weeks was all about creating, connecting and deploying different smart contracts. Here is a link to the project: [https://devfolio.co/projects/orbit-cebe](https://devfolio.co/projects/orbit-cebe) The Eth India fellowship program has come to an end, but the journey towards creating innovative solutions for the blockchain industry has just begun. Keep building, keep innovating, and continue to push the boundaries of what's possible in the world of blockchain and beyond. --- *Originally published on [kaukushikmar](https://paragraph.com/@kaukushikmar/orbit-revolutionizing-defi-with-undercollateralized-borrowing)*