An on-chain credit pool is a collection of digital assets provided by lenders within a decentralized finance protocol, specifically designated for issuing loans. These pools operate directly on a blockchain, with smart contracts managing the deposit, withdrawal, and lending terms. Borrowers access funds from these pools, often by supplying collateral. It facilitates transparent and permissionless credit issuance.
Context
On-chain credit pools are fundamental to decentralized lending, enabling a continuous supply of capital for borrowers and yield for lenders. News frequently reports on the size, utilization rates, and interest rates associated with these pools. The management of risks within these pools, such as bad debt or liquidations, is a constant area of focus for protocol governance.
This cross-venue collateral primitive aggregates user deposits into a single credit pool, directly addressing liquidity fragmentation and boosting portfolio-wide capital efficiency.
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