# Lending Protocol

> A DeFi app that lets users deposit crypto to earn interest and others borrow against collateral.

Canonical URL: https://fudfomo.co/glossary/lending-protocol
Source: What The Block! Dictionary v1.0 (last updated 2026-04-25), browsable at https://wtb.fudfomo.co.

## Definition

A lending protocol is a smart contract platform where you can either supply assets to earn interest or borrow against your own assets as collateral. Rates are set by the balance of supply and demand inside each pool, not by a central manager.

The largest lending protocols hold billions of dollars of deposits. They are a core piece of DeFi but inherit risks from oracle pricing, liquidations, and underlying smart contract bugs.

## Related terms

- [DeFi](https://fudfomo.co/glossary/defi): Decentralised finance. Apps that offer lending, trading, and saving on a blockchain instead of through a bank.
- [Collateral](https://fudfomo.co/glossary/collateral): An asset you lock up to back a loan. If the loan is not repaid, the collateral can be taken.
- [Liquidation](https://fudfomo.co/glossary/liquidation): When a borrower's collateral is sold off automatically because their loan has fallen below the safety threshold.
- [Vault](https://fudfomo.co/glossary/vault): A DeFi smart contract that automates a strategy on behalf of depositors.

## See the full catalogue

What The Block! covers more than 2,000 plain-English crypto terms, delivered as embeddable hover-state tooltips for crypto exchanges. https://wtb.fudfomo.co