How does decentralized lending work in DeFi?

Lending in DeFi allows for loans without intermediaries and even without the need for KYC.

📌 Principle of operation:

🔒 Collateral – the user locks a cryptocurrency in a smart contract (for example, ETH, BTC) as collateral.

💸 Loans – one can borrow in stablecoins or other cryptocurrencies.

⚠️ Repayments – if the price of the collateral drops, a liquidation occurs to protect the system.

Platforms like Aave, Compound, and MakerDAO are already implementing these solutions.

The most important thing is to closely monitor the value of the collateral.

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