Lending & Borrowing Basics

DeFi lending lets you earn interest or access liquidity without selling your crypto.

How DeFi Lending Works

Deposit crypto to protocol

Receive interest-bearing tokens

Earn yield continuously

Withdraw anytime (usually)

Deposit collateral

Borrow up to a limit

Pay interest on loan

Repay to unlock collateral

How much you must deposit vs borrow

Typically 150-200%

Example: Deposit $1500 ETH, borrow $1000 USDC

Measures position safety

Below 1.0 = at risk of liquidation

Keep above 1.5 for safety

If collateral value drops too much

Protocol sells collateral to repay loan

Borrower loses collateral + penalty

Multiple assets

Variable & stable rates

Flash loans

Simple interface

Governance token rewards

Established track record

Smart contract risk

Liquidation risk

Interest rate changes

Oracle failures