Onchain lending markets let people supply crypto assets to shared pools and let others borrow from them through smart contracts. The contracts manage transactions, but borrowers still face variable rates, collateral requirements and possible liquidation. A lending protocol sets rules in smart contracts. Suppliers deposit eligible assets into a market, adding liquidity borrowers can access. Borrowers typically deposit collateral first, then borrow another asset up to the market’s risk limits. This is called overcollateralized lending because the collateral value generally must exceed the borrowed value.