Lending and borrowing on-chain Decentralized lending protocols
use smart contracts to coordinate suppliers and borrowers. A supplier deposits an asset into a market and may accrue interest. A borrower usually deposits collateral and borrows another asset against it.
The contract tracks balances, interest, collateral values, and risk rules. If collateral value falls too far or debt grows beyond permitted limits, part of the collateral may be liquidated to repay the debt. Liquidation helps protect the market but can be costly for the borrower.
Rates often change with supply and demand. Smart-contract bugs, oracle failures, volatile collateral, and low liquidity can also affect outcomes.
Before using a lending market, identify the collateral factor, liquidation threshold, interest-rate model, oracle design, and withdrawal conditions. Understand what happens if collateral prices move quickly.
On-chain lending automates rules; it does not remove market, credit, or technical risk.
@justinsuntron @DeFi_JUST #TRONEcoStar #DeFi
use smart contracts to coordinate suppliers and borrowers. A supplier deposits an asset into a market and may accrue interest. A borrower usually deposits collateral and borrows another asset against it.
The contract tracks balances, interest, collateral values, and risk rules. If collateral value falls too far or debt grows beyond permitted limits, part of the collateral may be liquidated to repay the debt. Liquidation helps protect the market but can be costly for the borrower.
Rates often change with supply and demand. Smart-contract bugs, oracle failures, volatile collateral, and low liquidity can also affect outcomes.
Before using a lending market, identify the collateral factor, liquidation threshold, interest-rate model, oracle design, and withdrawal conditions. Understand what happens if collateral prices move quickly.
On-chain lending automates rules; it does not remove market, credit, or technical risk.
@justinsuntron @DeFi_JUST #TRONEcoStar #DeFi