On-chain lending is a decentralized financial transaction that occurs directly on the blockchain, allowing for loans without intermediaries. Here are the main aspects:
🚀Features
1. *Decentralization*: No traditional financial intermediaries.
2. *Transparency*: All transactions are recorded on the blockchain.
3. *Security*: Uses smart contracts to ensure compliance with terms.
4. *Automation*: Processes are executed automatically.
5. *Global access*: Anyone with an internet connection can participate.
🚀Types of On-Chain Loans
1. *Collateralized loans*: Require collateral (e.g. cryptocurrencies).
2. *Uncollateralized loans*: Do not require collateral.
3. *Flash loans*: Short-term loans with high rates.
🚀Popular Protocols
1. Ghost
2. Compound
3. MakerDAO
4. Uniswap
5. dYdX
🚀Advantages
1. *Quick access to capital*
2. *Competitive rates*
3. *Flexibility*
4. *Privacy*
5. *Security*
🚀Disadvantages
1. *Volatility risks*
2. *High interest rates*
3. *Liquidity risks*
4. *Technical complexity*
5. *Regulation still under development*
🚀How it Works
1. *Collateral deposit* (if required)
2. *Loan application*
3. *Automatic approval* by smart contract
4. *Receiving the loan*
5. *Loan repayment* with interest
🚀Risks
1. *Default risk*
2. *Liquidity risk*
3. *Volatility risk*
4. *Regulatory risk*
5. *Technical risk*
⚠️Always remember to study, whatever you have doubts about! 😉
