As with most things in the financial world, when something promises extremely high rates of return there’s usually a catch. DeFi lending is no exception.

To put it simply, DeFi, shorthand for decentralized finance, is an ecosystem of blockchain-based applications that offer a range of financial services similar to those provided by traditional banks, insurance brokers, and other financial intermediaries. The main difference being, these decentralized applications, known as dapps, run autonomously without any third party acting in the middle. That’s because each dapp is powered by a smart contract – a special computer program that automatically performs a function when certain predefined conditions are met.

Crypto lending is just one type of traditional financial service that is now accessible through these peer-to-peer operated dapps. Similar to depositing funds into a savings account to receive interest payments, crypto…

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