Let's talk about decentralized lending.
Common on-chain lending uses overcollateralization: the value you can borrow is less than the value of your collateral.
One thing many people overlook: on-chain lending doesn't perform credit checks. Borrowers are just anonymous addresses, so protocols have to rely on collateral being worth more than the loan to control the risk of bad debt.
When the market is highly volatile, keep an eye on your health factor. If necessary, add collateral or repay part of your loan in advance.
$AAVE is the governance token of the on-chain lending protocol Aave. Its current price is 124.51.
#AAVE
Common on-chain lending uses overcollateralization: the value you can borrow is less than the value of your collateral.
One thing many people overlook: on-chain lending doesn't perform credit checks. Borrowers are just anonymous addresses, so protocols have to rely on collateral being worth more than the loan to control the risk of bad debt.
When the market is highly volatile, keep an eye on your health factor. If necessary, add collateral or repay part of your loan in advance.
$AAVE is the governance token of the on-chain lending protocol Aave. Its current price is 124.51.
#AAVE