Borrowing and Lending

Definition ∞ Borrowing and lending in cryptocurrency involves users obtaining digital assets as loans or providing their assets to earn interest. These activities are facilitated by decentralized protocols or centralized platforms. Borrowers typically supply collateral to secure their loans, while lenders contribute to liquidity pools. This system enables capital allocation within the digital asset economy.
Context ∞ The borrowing and lending sector remains a central component of the decentralized finance landscape, offering yield opportunities for asset holders and access to capital for others. News often highlights fluctuations in interest rates, protocol liquidations, and the introduction of new lending products. Regulatory discussions also frequently concern the classification and oversight of these financial services.