A credit protocol in decentralized finance establishes rules and mechanisms for issuing, managing, and settling loans on a blockchain without traditional intermediaries. These protocols often leverage smart contracts to automate lending processes, enabling peer-to-peer or pooled lending arrangements. They define parameters such as collateral requirements, interest rates, and repayment terms.
Context
Credit protocols are a central component of the decentralized finance ecosystem, enabling users to access capital or earn yield on their digital assets. News frequently covers the launch of new protocols, changes in their lending parameters, or incidents related to loan defaults and liquidations. Their evolution is a key indicator of the growth and increasing sophistication of digital asset lending markets.
Creditlink's AI-driven scoring model leverages on-chain behavior to create a decentralized credit profile, fundamentally enhancing capital efficiency across the DeFi vertical.
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