Lending Pool
Lending pools are specialized liquidity pools created with the purpose of facilitating peer-to-peer (P2P) lending. When individuals borrow funds from a lending pool, they are required to provide sufficient collateral in the form of assets. For instance, if the collateralization ratio for borrowing against USD Coin (USDC) is set at 200%, a user who contributes $1,000 USDC would be eligible to borrow up to $500 USD. Users who contribute their assets to the lending pool receive rewards in the form of a percentage of the total lent amount. The lending and borrowing process is automated through smart contracts, which establish predefined lending rates based on the specific assets and protocols involved.