Cross-chain lending allows users to borrow or lend digital assets across different independent blockchain networks. This functionality breaks down liquidity silos, enabling participants to collateralize assets on one chain to borrow assets on another. It facilitates greater capital efficiency and expands the utility of various digital assets. Such systems rely on secure bridges or atomic swaps to ensure asset transfer and repayment integrity.
Context
Cross-chain lending is a rapidly evolving sector within decentralized finance, addressing the fragmentation of liquidity across numerous blockchains. News frequently covers new protocols launching cross-chain capabilities and the security audits of their underlying bridging technologies. Regulatory considerations for these interconnected financial services are also a significant topic, as they introduce new complexities for oversight and risk management.
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