Definition ∞ A DeFi lending platform enables users to borrow and lend digital assets without traditional financial intermediaries. These platforms operate via smart contracts on a blockchain, automating the loan origination, interest rate calculation, and collateral management processes. Users supply liquidity to earn interest or borrow by providing overcollateralization. The system offers global access to financial services with transparency.
Context ∞ The sector consistently sees news about liquidity pools, interest rate fluctuations, and security audits of smart contracts. Debates frequently center on the risks associated with volatile collateral, potential protocol exploits, and regulatory oversight. Future growth is expected in institutional adoption and the development of undercollateralized lending solutions.
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