#OnChainLendingSurge Main Differences Between On-Chain Lending and Traditional Lending.
To better understand the main differences, let's compare on-chain lending with traditional lending:
#On-Chain Lending (DeFi)
* Decentralized: There are no intermediaries like banks. Transactions occur directly between users, through smart contracts on the blockchain.
* Transparent: All transactions are publicly recorded on the blockchain, increasing transparency and auditability.
* Accessibility: Anyone with a cryptocurrency wallet and an internet connection can participate, regardless of geographic location or credit history.
* Efficiency: Transactions are processed quickly and automatically, without the need for manual approval.
* Flexibility: Allows you to lend and borrow a variety of cryptocurrencies and other digital assets.
* Competitive interest rates: Generally offer higher interest rates for lenders and lower rates for borrowers, compared to traditional banks.
#TraditionalLending.
* Centralized: Intermediated by financial institutions (banks, cooperatives, etc.).
* Less transparent: Information about transactions is controlled by financial institutions.
* Accessibility: Requires opening a bank account and may have income and credit requirements.
* Slower: The loan approval process may be slower and more bureaucratic.
* Less flexible: The options for lending and borrowing assets are more limited.
* Variable interest rates: Interest rates may be higher and vary according to the financial institution and the client's profile.