# Lending Protocol

*Crypto & Digital Assets — Finicade finance glossary*

A lending protocol lets users deposit assets to earn interest and borrow against collateral, with rates set algorithmically by utilisation. There is no credit assessment because there is no identity — which is why every loan must be overcollateralised, and why DeFi lending cannot yet do the thing that makes banking economically useful: lend to people who don't already have the money.

**Also known as:** DeFi lending, Aave, Compound, money market protocol

**Related terms:** [Overcollateralization](https://finicade.com/glossary/overcollateralization), [Liquidation](https://finicade.com/glossary/liquidation), [DeFi](https://finicade.com/glossary/defi), [Oracle](https://finicade.com/glossary/oracle), [Yield Farming](https://finicade.com/glossary/yield-farming)

Source: https://finicade.com/glossary/lending-protocol