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.)