Lending

Definition ∞ Lending in the digital asset space involves the provision of cryptocurrencies to borrowers in exchange for interest payments. This can occur through centralized platforms or decentralized finance (DeFi) protocols. Borrowers typically provide collateral to secure the loan, and lenders earn yield on their deposited assets. The terms and risks associated with digital asset lending are critical considerations for participants.
Context ∞ The current context for digital asset lending is marked by heightened scrutiny following the insolvency of several major lending platforms. Discussions revolve around the adequacy of collateralization, the transparency of reserve assets, and the regulatory status of lending products. The potential for contagion and the impact on broader market liquidity are key areas of concern for investors and regulators alike.