Under-Collateralized Borrowing refers to a lending arrangement where the value of the collateral provided by the borrower is less than the value of the loan received. In traditional finance, this is common with credit checks, but in decentralized finance (DeFi), it typically relies on reputation protocols, credit delegation, or specific flash loan mechanisms. This practice introduces higher risk for lenders. It expands access to capital.
Context
Under-collateralized borrowing remains a developing and high-risk area within decentralized finance, as protocols seek methods to extend credit efficiently without traditional credit scores. Innovations in reputation systems and pooled liquidity are continuously explored to mitigate associated risks. The long-term viability of these models is a key subject of ongoing research.
A multi-action smart contract logic error in a deprecated lending pool allowed an attacker to repeatedly bypass the solvency check, draining $1.8M in MIM.
We use cookies to personalize content and marketing, and to analyze our traffic. This helps us maintain the quality of our free resources. manage your preferences below.
Detailed Cookie Preferences
This helps support our free resources through personalized marketing efforts and promotions.
Analytics cookies help us understand how visitors interact with our website, improving user experience and website performance.
Personalization cookies enable us to customize the content and features of our site based on your interactions, offering a more tailored experience.
