Lending & Borrowing Key Considerations
Some key considerations relating to lending & borrowing projects include:
- Magnified Exposure: Users can lend out assets as collateral and take out.
- Liquidation Risk: If the collateral value drops or the borrowed asset price rises, liquidation may be triggered.
- Interest Rate Volatility: Borrowing and lending rates fluctuate based on supply and demand.
- Smart Contract Risk: Even well-known lending protocols like Aave and Compound carry security risks.
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