Someone asked: Why does borrowing on-chain require overcollateralization?
My answer: Major decentralized lending platforms require overcollateralization: the value you can borrow is lower than the value of your collateral. On-chain lending has no credit checks, and borrowers are just anonymous addresses. The protocol can only rely on collateral being worth more than the loan to control the risk of bad debt.
$AAVE 135.29（+3.39%）
If you get it, comment 1. If you don't, leave a message and ask away.
#AAVE
My answer: Major decentralized lending platforms require overcollateralization: the value you can borrow is lower than the value of your collateral. On-chain lending has no credit checks, and borrowers are just anonymous addresses. The protocol can only rely on collateral being worth more than the loan to control the risk of bad debt.
$AAVE 135.29（+3.39%）
If you get it, comment 1. If you don't, leave a message and ask away.
#AAVE
