Credit and lending are two of the most important financial functionalities that exist in Decentralized Finance (DeFi), and traditional finance.
However, there are differences between the mechanics in Defi and Centralized Finance (CeFi). In CeFi, we often struggle to increase our credit and loan limits, and usually, the mechanism of setting a threshold on funds we can access is not clear. There are billions of people unbanked, and even consumers who have access to financial services in traditional finance don't have access to the most competitive financial products.
In DeFi, it doesn't matter your social network, who you are, or what is your credit score, as long as you accept the rules of DeFi protocols, which are clear and transparent for everyone. Many sophisticated products offer attractive rewards.
DeFi is constantly changing, but there are fundamentals and concepts that we should acquaint you with before jumping into DeFi. Ethereum and its major protocols developed these ideas and functionality, like MakerDAO, Compound, and Aave.
Over my studies, I prepared this material in the link below, covering debt and lending in Defi, its foundations, and its primary protocols. Governance and token-economics of these protocols are out of this scope.
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