#OnChainLendingSurge On-chain lending services are decentralized financial platforms that allow users to lend and borrow cryptocurrency assets directly on the blockchain without the need for traditional intermediaries like banks. These services leverage smart contracts to facilitate and secure transactions, ensuring transparency, automation, and trustlessness. Below is an overview of on-chain lending services:

Key Features

1. Decentralization: Operate without intermediaries, relying on blockchain technology.

2. Transparency: All transactions are recorded on the blockchain, ensuring openness.

3. Smart Contracts: Automate lending, borrowing, and liquidation processes, reducing human intervention.

4. Global Access: Anyone with an internet connection can participate, increasing financial inclusivity.

5. Permissionless: Users do not need to undergo extensive verification processes.

6. Overcollateralization: Most platforms require borrowers to provide collateral exceeding the loan amount to mitigate risk.

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How It Works

1. Lending:

Users deposit their crypto assets into a lending pool.

These assets earn interest, which is paid by borrowers.

2. Borrowing:

Borrowers provide collateral (usually in crypto) to secure loans.

Loans are often overcollateralized (e.g., providing $150 worth of collateral for a $100 loan).

If the collateral value drops below a certain threshold, it may be liquidated.

3. Interest Rates:

Determined by market supply and demand.

Some platforms use dynamic rates that adjust based on utilization rates of the lending pool.