Decentralized lending protocols can collaborate with traditional finance by offering innovative solutions like transparent, blockchain-based loan tracking and smart contract automation. These protocols can integrate with banks to provide faster, cost-effective lending options, enhancing efficiency. For instance, they can enable fractionalized asset lending or cross-border loans with reduced intermediaries. Traditional institutions benefit from lower operational costs and access to new markets, while decentralized platforms gain credibility and scale. Regulatory compliance, such as KYC/AML integration, is key to bridging the gap. Successful partnerships, like those seen with stablecoin issuers and banks, show feasibility. However, challenges like regulatory uncertainty and interoperability must be addressed to ensure seamless cooperation.