DeFi loans: How they work, where to use them, and what to avoid

When you take out a DeFi loan, a type of loan issued on a blockchain without a bank or middleman, using crypto as collateral. Also known as crypto lending, it lets you unlock cash from your holdings without selling them. Unlike traditional banks, there’s no credit check. Instead, you lock up more crypto than you borrow—usually 150% or more—to cover risk. If the value of your collateral drops too far, the loan gets automatically sold off to protect the lender. It’s fast, open to anyone with a wallet, and completely automated.

DeFi loans run on DeFi platforms, blockchain-based financial applications that operate without central control. Examples include Aave, Compound, and JUST on TRON, which you’ll see mentioned in posts below. These platforms connect borrowers directly with lenders who earn interest by supplying crypto to liquidity pools. The whole system runs on smart contracts—self-executing code that enforces rules without human intervention. But that also means mistakes or bugs can’t be undone. There’s no customer service to call if something goes wrong. Many users use DeFi loans to buy more crypto, pay bills, or fund startups, but the biggest risk isn’t the platform—it’s the price of your collateral. If Bitcoin or Ethereum crashes, your loan could get liquidated in minutes.

Not all DeFi loans are created equal. Some platforms have weak security, no audits, or fake volume. You’ll find reviews of platforms like MM Finance and Libre in the posts below—some are barely used, others are outright scams. And while some users treat these loans like free money, the truth is they’re high-pressure tools. You need to watch your collateral ratio constantly, understand liquidation thresholds, and know which tokens are stable enough to borrow. The collateralized loans, loans backed by digital assets that can be seized if payments fail you take out must match your risk tolerance. A $10,000 loan backed by volatile meme coins is a gamble. One backed by USDC or DAI is far safer.

What’s missing from most guides? Real-world consequences. If your loan gets liquidated, you lose part of your crypto—and you might not even get a warning. Some platforms charge high fees, others hide them in interest rates that reset every few seconds. And while DeFi loans sound like freedom, they’re not for everyone. If you’re not comfortable tracking prices 24/7 or don’t understand how stablecoins work, you’re playing with fire.

The posts below cover everything from real DeFi loans like JUST and Aperture Finance to the fake ones that look real but vanish overnight. You’ll see how people lost money on platforms with zero audits, how airdrops tied to lending protocols actually work, and why some so-called "low-fee" exchanges are just traps. No fluff. No hype. Just what happened, who got burned, and how to avoid the same fate.