✅ Master DeFi Lending & Borrowing
Understand lending protocols, interest rates, and collateral management
Your Progress
0 / 5 completed🎓 Key Takeaways
Let's review the essential concepts about DeFi lending and borrowing that will help you participate safely and effectively.
Permissionless Access
No credit checks, KYC, or intermediaries. Anyone with crypto can lend or borrow globally through smart contracts. Over-collateralization replaces traditional trust systems.
Liquidation Risk
Always maintain health factor >1.5 for safety. Monitor collateral prices and be prepared to add collateral or repay debt during volatile markets to avoid liquidation penalties (5-15%).
Dynamic Rates
Interest rates adjust algorithmically based on utilization. Higher utilization means higher rates. Variable rates are typically lower but less predictable than stable rates.
Capital Efficiency
Access liquidity without selling holdings. Use borrowed funds for leverage, arbitrage, or yield farming. Tax-efficient compared to selling assets for cash.
Before Using DeFi Lending:
- •Understand collateral ratios: Know max LTV and liquidation thresholds for each asset
- •Check smart contract audits: Use established protocols with proven security track records
- •Monitor your positions: Set price alerts and check health factors regularly
- •Start small: Test with small amounts to understand mechanics before scaling up
- •Keep emergency funds: Have assets ready to add collateral during market drops
📝 Knowledge Check Quiz
Test your understanding of DeFi lending and borrowing:
Why does DeFi lending require over-collateralization?