Credit Structures

Definition ∞ Credit structures in digital finance refer to the arrangements and mechanisms facilitating lending and borrowing of digital assets. These structures define terms, collateral requirements, interest rates, and repayment schedules within decentralized or centralized platforms. They enable capital efficiency and risk management in the crypto lending ecosystem. Robust credit structures are vital for financial stability and investor protection.
Context ∞ The evolution of credit structures within decentralized finance (DeFi) is a key area of discussion, particularly concerning under-collateralized loans and credit scoring methodologies. Recent market volatility has highlighted the need for more resilient and transparent credit arrangements to prevent systemic risks. Future innovations may involve permissioned lending pools and novel collateral types to expand credit access while maintaining security.