Permissionless lending is a decentralized financial activity where users can lend or borrow digital assets without requiring approval from any central authority or intermediary. This process is fully automated and enforced by smart contracts on a blockchain, allowing for open and equitable access to credit markets. It removes traditional barriers to entry, fostering financial inclusion. This model operates based on predefined code, not human discretion.
Context
Permissionless lending is a core principle of decentralized finance, promoting financial inclusion and open access to credit markets for digital asset holders globally. Regulatory bodies are currently examining the implications of such open systems, leading to ongoing discussions about consumer protection, market integrity, and anti-money laundering compliance within this evolving sector. The expansion of this model continues to challenge traditional financial oversight.
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