DeFi Lending: How Crypto Loans Work and What to Watch

When you hear DeFi lending, a system that lets users borrow or earn crypto without banks, using smart contracts on public blockchains. Also known as decentralized crypto lending, it replaces traditional loan paperwork with code, letting anyone with a wallet act as borrower or lender. The core idea is simple: lock up digital assets as collateral, trigger a smart contract, and receive a loan in another token. Because the process runs on-chain, it’s transparent, permissionless, and can happen 24/7. Users gain access to capital without selling their holdings, while lenders earn interest that often outpaces traditional finance. This blend of finance and code fuels a massive, fast‑growing market that’s reshaping how people think about borrowing.

Key concepts in DeFi lending

The broader Decentralized Finance, a suite of financial services built on blockchain provides the playground for lending. Within that space, crypto lending platforms, protocols like Aave, Compound, and Maker that match borrowers with lenders act as the marketplaces. Most of these platforms rely on stablecoins, coins pegged to fiat currencies such as USDC or DAI, to keep loan values predictable. The loan itself is usually a collateralized loan, where the borrower locks assets like ETH, BTC, or LP tokens as security. If the collateral value drops below a safety threshold, the smart contract triggers a liquidation to protect lenders. This risk‑management loop links three core entities: the lending protocol, the collateral asset, and the stablecoin used for repayment.

All of this matters because the choices you make—what platform you trust, which collateral you lock, and which stablecoin you hold—directly affect your yields and exposure to liquidation risk. Below you’ll find a mix of deep‑dive guides, platform reviews, and risk breakdowns that walk you through the practical side of DeFi lending. Whether you’re curious about how to start earning interest on idle tokens or you want to understand the mechanics behind a flash loan, the articles ahead give you the context and actionable steps you need to navigate this rapidly evolving landscape.