Debt Market

Definition ∞ A debt market is a financial arena where participants issue and trade debt instruments. In the context of digital assets, this refers to platforms and protocols enabling borrowing and lending of cryptocurrencies or stablecoins. These markets provide capital for various purposes, often collateralized by other digital assets, with specified repayment terms and interest obligations. It facilitates liquidity and capital efficiency within the digital economy.
Context ∞ The crypto debt market is currently experiencing rapid expansion, driven by decentralized finance (DeFi) lending protocols and stablecoin adoption. A key discussion point involves the risks associated with over-collateralization requirements and potential liquidations during market volatility. Future developments anticipate greater institutional participation and the creation of more sophisticated debt instruments, including tokenized bonds.