Definition ∞ Institutional DeFi Credit refers to the provision and utilization of decentralized finance lending and borrowing services by traditional financial institutions, large funds, or corporations. This involves regulated entities accessing on-chain liquidity pools or peer-to-peer lending platforms, often requiring know-your-customer and anti-money laundering compliance layers. It bridges traditional finance with the transparency and efficiency of DeFi.
Context ∞ The growth of institutional DeFi credit is a key indicator of the increasing maturity and acceptance of decentralized finance by mainstream financial players. Challenges include regulatory uncertainty, the need for robust risk management, and the development of compliant on-chain identity solutions. Future expansion depends on clearer legal frameworks and the creation of purpose-built DeFi protocols that meet institutional operational requirements.
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