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In the world of DeFi, there are two terms that are often used:
Lending & Borrowing
๐ฐ Lending
You lend your crypto to a DeFi platform and earn interest in return.
๐ฆ Borrowing
You borrow crypto by collateralizing your existing crypto assets.
Example:
You have ETH โ used as collateral โ then borrow USDT.
All these processes are automated through smart contracts, without banks or intermediaries.
This is one way DeFi creates a new financial system on the blockchain.
#Crypto #DeFi #Web3