Glossary Term
Borrowing
Borrowing in the context of decentralized finance (DeFi), including on Solana, refers to obtaining assets or tokens by providing collateral, typically through lending protocols or decentralized applications (dApps). This process enables users to access liquidity without selling their holdings, facilitating a wide range of trading and investment strategies.
Beginner
DeFi
Crypto Terminology
Borrowing: what is it?
Examples
- 1
A user deposits SOL as collateral and borrows USDC for additional trading.
- 2
A trader leverages their assets to take larger positions in the market using a borrowing protocol.
- 3
An investor uses borrowed stablecoins from Solend to participate in yield farming.
Common Use Cases
Leverage trading/offering enhanced exposure to certain assets.
Accessing liquidity for purchases without having to sell core holdings.
Active participation in DeFi strategies like yield farming or liquidity mining.
Short-selling one asset while remaining long on the collateral asset.
Pro Tips
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Compare borrowing rates and platform security before choosing a protocol.