Lending Primitive

Definition ∞ A lending primitive in decentralized finance refers to a fundamental, foundational protocol or smart contract that enables basic lending and borrowing functionalities. These primitives serve as building blocks upon which more complex financial applications and services are constructed. They provide the core logic for interest rate determination, collateral management, and liquidation processes. Their simplicity allows for composability within DeFi.
Context ∞ Lending primitives, such as those offered by Aave or Compound, form the bedrock of the DeFi ecosystem, enabling a wide array of financial innovation. News often discusses upgrades to these primitives or their integration into new decentralized applications. The efficiency and security of these underlying components are critical for the stability of the broader DeFi market.