The Future of Lending in DeFi: From Over-Collateralization to Undercollateralized Loans
Decentralized Finance, or DeFi, has emerged as one of the most transformative forces in the global financial ecosystem over the past few years. At its core, DeFi aims to recreate traditional financial systems—like lending, borrowing, trading, and asset management—using blockchain technology, eliminating the need for intermediaries such as banks and brokers. Among the many innovations DeFi has introduced, decentralized lending stands out as a cornerstone of the movement. It allows users to lend and borrow digital assets directly from smart contracts, creating a permissionless, transparent, and globally accessible financial infrastructure.