Credit Markets

Definition ∞ Credit Markets in the digital asset space refer to platforms and protocols where users can borrow and lend cryptocurrencies or other digital assets. These markets operate both on centralized exchanges and through decentralized finance (DeFi) protocols, enabling capital allocation and yield generation. Participants typically provide collateral to secure loans, and interest rates are determined by supply and demand dynamics. They represent a significant component of the broader digital economy.
Context ∞ Decentralized Credit Markets are a rapidly expanding sector within DeFi, presenting both opportunities and risks for participants. A current focus involves addressing issues of over-collateralization, liquidations, and the assessment of creditworthiness in a pseudonymous environment. Regulatory bodies are also examining these markets to understand their systemic implications and potential for consumer protection concerns.