Lending

Lending is the English word for lending. In the crypto scene, it is primarily used to describe processes that involve lending. The processes involved differ from those of traditional lending. Crypto loans are usually only granted if there is overcollateralization.

The borrower must therefore transfer more money to the lenders in advance than they then borrow. This prevents fraud. Instead of personally, the transfer of funds takes place pseudonymously or even anonymously. The identity of the contracting parties is therefore irrelevant. Further data such as asset information is also not necessary. Instead of an intermediary, the transaction is processed via a smart contract.

The best-known decentralized lending protocol is Aave.