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  • What is Lending in DeFi?
  • How It Works
  • Why It’s Great for Beginners
  • Risks to Consider

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  1. DeFi & Yield Strategies on Rivo
  2. Types of DeFi Strategies

Lending

What is Lending in DeFi?

Lending in DeFi is like becoming your own bank. You let others borrow your crypto, and in return, they pay you interest — all powered by smart contracts, with no middleman needed.

How It Works

  • You deposit a token (like USDC, ETH, or wBTC) into a lending protocol like AAVE, Compound, or Morpho.

  • That protocol lets others borrow it — but only after they deposit collateral (so they can’t just run away with it).

  • You earn interest every second your tokens are being used.

  • Your funds are never handed to a person — they stay inside smart contracts with clear rules and protections.

Why It’s Great for Beginners

  • Passive income — Earn while doing nothing

  • Low touch — No trading or rebalancing

  • Flexible — You can usually withdraw at any time

Risks to Consider

  • Smart contract risk — If there’s a bug in the protocol code (we recommend only audited ones)

  • Liquidation risk — If borrowers’ collateral drops too fast in price and the system doesn’t react in time

  • Token risk — If you lend a token that suddenly loses value (stick to majors like ETH, USDC, etc.)

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Last updated 19 days ago

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