Definition ∞ A decentralized lending strategy involves providing or borrowing digital assets through peer-to-peer protocols operating on a blockchain, without intermediaries. Participants interact directly with smart contracts that automate loan agreements, collateral management, and interest rate calculations. Lenders supply liquidity to earn yield, while borrowers access funds by providing crypto collateral. This approach removes traditional financial institutions from the lending process.
Context ∞ News often covers decentralized lending strategies when discussing the growth of DeFi, liquidity pools, and the risks associated with smart contract vulnerabilities or liquidations. The transparency of on-chain operations contrasts with the opacity of traditional finance, leading to debates about regulatory oversight. Users assess these strategies based on yield rates, collateral requirements, and protocol security audits.
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