Now diving deeper into the mechanics of DeFi lending platforms it's fascinating to see how they operate At the heart of these platforms are smart contracts which automate the lending and borrowing processes When a user wants to borrow they first deposit their crypto assets as collateral The platform then assesses the value of the collateral and determines how much the user can borrow It's a dynamic system with loan-to-value ratios ensuring that loans are always over-collateralized This is a protective measure given the volatility of crypto assets Interest rates on these platforms are another intriguing aspect Unlike traditional banks where rates are often set in stone DeFi platforms have rates that adjust in real time based on supply and demand If more people are lending and fewer are borrowing interest rates might decrease and vice versa #DeFiMechanics #SmartContractLending #CryptoCollateral #DynamicInterestRates #LoanToValueRatios #DeFiVersusBanks #RealTimeRates #CryptoVolatility #SupplyAndDemand #DeFiInnovation #shorts
Via https://www.youtube.com/watch?v=SO-6N14XnJE
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