Onchain borrowing refers to the process of obtaining cryptocurrency loans directly through decentralized finance (DeFi) protocols operating on a blockchain. Smart contracts autonomously manage the lending and borrowing terms, collateralization, and repayment schedules without the need for traditional financial intermediaries. These loans are typically overcollateralized to mitigate risk for lenders. They offer transparency and accessibility.
Context
Onchain borrowing is a fundamental component of the DeFi ecosystem, providing capital efficiency and liquidity to digital asset holders. Discussions often address the inherent risks associated with smart contract vulnerabilities, market volatility, and liquidation thresholds. A critical future development involves the maturation of DeFi lending protocols, including enhanced risk management tools and clearer regulatory guidance, to support broader institutional and retail participation.
This regulated MMF primitive on Mantle unlocks a compliant $1B collateral pathway, strategically bridging institutional TradFi capital to Layer-2 DeFi.
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