Under-Collateralized Lending

Loans that require less than 100% collateral, enabled by identity-based credit assessment.

under-collateralized lendinguncollateralized loansDeFi lendingidentity-based lendingcredit DeFi

Definition

Under-collateralized lending refers to loans where the borrower provides less collateral than the loan value. This is the norm in traditional finance (mortgages, credit cards) but challenging in DeFi where pseudonymous users lack credit histories.

By integrating identity verification and reputation systems, under-collateralized DeFi lending becomes possible. Borrowers can access capital without over-collateralizing, while lenders are protected through verified identity and AI-powered underwriting.

ByEnnen's DeFi.ly enables under-collateralized lending through integration with IDSentric (identity) and CredZK (financial proofs).

Examples

1.150% LTV loans based on verified identity

2.Credit lines for verified DeFi users

3.Reputation-based borrowing limits

Related ByEnnen Products

DeFi.ly

Instant Lending

Related Terms

Flash Loans

Uncollateralized loans that must be borrowed and repaid within a single blockchain transaction.

Zero-Knowledge Proofs (ZKPs)

Cryptographic method to prove something is true without revealing the underlying information.

Ready to Implement Under-Collateralized?

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