Lending & Borrowing in DeFi

What you’ll learn

• •DeFi lending pools let suppliers earn interest and borrowers pay interest, coordinated automatically by smart contracts with algorithmic rates.
• •Borrowing is typically overcollateralised — depositing more value than you borrow — because there's no credit check to rely on instead.
• •Falling collateral value can trigger automatic 'liquidation': the protocol sells your collateral, often with a penalty, with no warning or negotiation.
• •A comparatively lower-risk use case is borrowing against assets you don't want to sell, for short-term liquidity.
• •Using borrowed funds to buy more crypto ('leverage') amplifies both gains and losses, and increases liquidation risk simultaneously.
• •Lending interest is a genuinely sustainable yield source, funded by real borrowers rather than token emissions.