DeFi Lending: How It Works and What You Need to Know
When you lend crypto on a DeFi lending, a system that lets people lend and borrow cryptocurrency without banks using smart contracts. Also known as decentralized finance lending, it removes middlemen and lets you earn interest directly from other users. Unlike banks, there’s no credit check. You lock your crypto into a smart contract, self-executing code on a blockchain that automatically handles loans and repayments, and get paid in real time. But here’s the catch: if the code has a bug or the market crashes, you could lose everything — no FDIC insurance, no customer support.
Most DeFi lending platforms like Aave or Compound let you deposit tokens like ETH or USDC and borrow against them. You don’t need to sell your crypto to get cash — you just use it as collateral. That’s why people use it: to access liquidity without giving up their holdings. But if your collateral drops too far in value, the smart contract automatically sells it to cover the loan. That’s called a liquidation — and it happens faster than you think.
Some users don’t just lend — they yield farming, the practice of moving crypto between DeFi protocols to maximize returns. They deposit tokens, earn interest, then use that interest as collateral for another loan, repeating the cycle. Sounds smart? It is — until one platform gets hacked or the token price collapses. The high yields you see? They’re often paid in new, unstable tokens with no real value. Many of the projects in our collection, like PLEXUS and CoinWind, look like they’re offering big returns but have zero trading volume and no real users. That’s not innovation — it’s gambling with code.
DeFi lending isn’t magic. It’s just finance with more risk and less oversight. If you’re looking to earn passive income from crypto, you need to understand how the system actually works — not just how the marketing says it works. Below, you’ll find real reviews of platforms, breakdowns of failed projects, and warnings about tokens that look like opportunities but are just traps. No hype. No fluff. Just what’s real.
