Overview
A lending pool is a pool of deposited assets from which borrowers can take loans, with interest set by utilization. It powers decentralized money markets. Lenders supply assets and earn interest; borrowers post collateral.
How It Works
Suppliers deposit into a pool, and borrowers draw from it against collateral. Interest rates adjust with utilization — higher borrowing demand raises rates. The pool is protected by liquidation when collateral falls below thresholds.
Why It Matters
Lending pools remove the need for a matching counterparty, enabling continuous, permissionless credit. They are the core of DeFi lending platforms like Aave and Compound. Their design balances capital efficiency and lender safety.
Related Concepts
Lending pools are part of Lending and rely on Collateral and Interest Rate Models. They connect to Liquidation and Loan-to-Value.