Defi lending is just allowing you to borrow while your assed gonna be used as a collateral, it's just the same as lending in real world, except it's done automatically with code instead of needing human intervention.
But what blows my mind is the flash loan, which essentially allowing someone to borrow millions of dollar without collateral, to literally anyone, but there's special requirement why that could be done and why that's not gonna make the platform goes bankrupt.
DeFi allows people to make loan with smart contracts and decentralized. They don't have to join centralized exchanges and lock their coins as collateral to loan.But what blows my mind is the flash loan, which essentially allowing someone to borrow millions of dollar without collateral, to literally anyone, but there's special requirement why that could be done and why that's not gonna make the platform goes bankrupt.
The most attractive things with DeFi is decentralization but liquidation is a kind of risk for any loan. If your collateral value drops to liquidation threshold, your loan will be closed and collateral will be taken as part of liquidation.
Loan is never the best choice if you I have money, use it, and don't consider loan as the only way to get rich.
Thanks , good to know
