Onchain Loan Origination

Definition ∞ Onchain loan origination is the process of creating and issuing a loan directly on a blockchain using smart contracts. This method automates the entire loan lifecycle, from collateral locking and interest calculation to repayment and liquidation, all executed by self-executing code. It eliminates the need for traditional financial intermediaries, reducing overhead and potentially increasing speed. Loans are transparently recorded on the distributed ledger.
Context ∞ Onchain loan origination is a core component of decentralized finance (DeFi), frequently discussed in crypto news as a disruptive alternative to traditional lending. It offers greater accessibility and efficiency but also presents unique risks related to smart contract security, collateral volatility, and regulatory uncertainty. The growth of onchain lending protocols is a key indicator of DeFi’s expansion and its increasing sophistication.