What is DeFi lending?

DeFi lending is a decentralized setup that works like traditional financial markets. Lenders deposit their money in a smart contract, and are issued some token that represent the value of the deposited asset plus the interest. There are two popular ways to borrow in DeFi. The first of these is collateralized loans. To take a collateralized loan you must add funds that is less than the value of the ammount you are borrowing multiplied by the collateral factor. The collateral factor is calculated independently, and the value depends on the volatility of the asset. ETH and DAI stablecoin for example, have a collateral factor of 75%. If you were borrowing 100ETH worth $30,000, you must add a collateral of 75ETH Worth 22,500. There are other DeFi some DeFi protocols like Alchemix that offer self-repaying DeFi laons by investing the deposited collateral in yield aggregators. The other way you can borrow in DeFi is more complicated and requires some experience in programming. Flash laons do not require collateral and can allow you borrow millions of dollars provided you are going to repay the loan in the same transaction. Details about flashloans are out of the scope of this question and further resources are available on the website blog. Top lending protocols are Anchor, Aave, Compound, Parallel Finance, and Venus.