Lending Protocol
An app where you can earn interest by lending your crypto, or borrow by putting up collateral. No credit checks or paperwork needed.
Example
Depositing ETH on Aave to earn 2% interest, while others borrow it at 3% interest.
Related Terms
Tools & Protocols
⚙️How It Works
- 1
Supply Assets
Deposit crypto into the lending pool
- 2
Earn Interest
Receive yield from borrower payments
- 3
Borrow (Optional)
Use your deposit as collateral to borrow other assets
- 4
Manage Position
Monitor health factor and repay when ready
⚠️Risks & Warnings
- •Smart contract bugs could drain the lending pool
- •Borrowers getting liquidated doesn't always cover bad debt
- •Interest rates can spike during high demand
- •Oracle manipulation can cause unfair liquidations
- •Governance attacks could change protocol parameters
🚀Getting Started
- 1Start with major protocols: Aave, Compound, or Morpho
- 2Supply stablecoins first to understand the mechanics
- 3Monitor your health factor if borrowing (stay above 1.5)
- 4Understand the difference between variable and stable rates
- 5Set up alerts for liquidation risk using tools like DefiSaver