Lending and borrowing in DeFi allow users to earn interest by supplying assets to lending protocols or accessing liquidity by borrowing funds against their crypto holdings.

In traditional banking, individuals deposit funds into a bank, which then lends those funds to borrowers at a higher interest rate, profiting from the spread. In Web3, lending protocols replace banks by allowing users to lend assets directly to a decentralized lending pool and earn interest while borrowers lock up crypto as collateral to take out loans.

Since DeFi borrowers are anonymous and lack credit scores, they cannot take out undercollateralized loans. Instead, they must first deposit sufficient assets into the protocol as collateral before borrowing.

To learn more about Lending & Borrowing, visit:

• How Lending & Borrowing Works
• Interest Rates
• Liquidations
• Flash Loans
• Lending & Borrowing Key Terms
• Lending & Borrowing Key Considerations
• Lending & Borrowing Projects