What is Crypto Lending ?

Today we’re going to Discuss about What is Crypto Lending ? and How does Crypto lending works?

What is Crypto Lending ?
Crypto lending works by taking crypto from one user and providing it to another for a fee. The exact method of managing loans varies from platform to platform. You can find crypto lending services on both centralized and decentralized platforms, but the core principles remain the same.

You don’t have to be the only borrower. You can passively earn income and earn interest by locking your crypto in a pool that manages your funds. Depending on the reliability of the smart contract you use, there is usually a low risk of losing your funds. This could be because the borrower puts up collateral, or a Ce-Fi (centralized finance) platform like Binance manages the loan.

How does Crypto Lending or Crypto Loan Works ?
Crypto lending typically involves three parties: the lender, the borrower, and the DeFi (decentralized finance) platform or crypto exchange. In most cases, the borrower must put up some collateral before borrowing any crypto. You can also avail flash loans without collateral (more on this below).

On the other side of a loan, you can have a smart contract that mints stablecoins or lends funds from another user. Lenders add their crypto to a pool that then manages the entire process and forwards them a cut of the interest.