@gwendolynna
How Do Crypto Lending and Borrowing Work?
Crypto lending allows users to deposit assets into lending platforms like Aave or Compound to earn interest. Borrowers provide collateral to secure loans, paying interest while using the borrowed funds. Unlike traditional loans, crypto lending is instant and decentralized. However, liquidation risks exist if collateral value drops below required thresholds. Lending platforms often use smart contracts, reducing reliance on intermediaries. While lending offers passive income, risks include platform security vulnerabilities, fluctuating interest rates, and possible liquidation.
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