Lending Pool
A smart contract aggregating digital assets from suppliers for lending and borrowing.
What is Lending Pool?
Lending pools are smart contracts where users deposit digital assets (e.g., DAI, USDT, ETH) to earn interest, and borrowers draw funds against collateral. Pools dynamically adjust interest rates based on utilization rates, ensuring liquidity balance. For instance, Aave’s Ethereum pool held over $10 billion in assets in 2025, supporting assets like wBTC and stablecoins. Suppliers earn variable or fixed rates, while borrowers pay based on demand.
Lending pools are the backbone of DeFi lending, enabling permissionless access to capital. In 2025, cross-chain pools on Layer 2 solutions like Optimism reduce fees, boosting participation. Protocols incentivize deposits with governance tokens, but risks like smart contract bugs require users to assess pool security via audits.
Related Terms
Smart Contract
Self-executing code on the Ethereum blockchain that automatically enforces agreement terms when conditions are met.
PIPE
Private placement of public equity shares to accredited investors at a discount, for quick capital.
Liquidity Pool (DEX)
A liquidity pool is a smart contract on a decentralized exchange (DEX) that holds a pair of tokens, enabling automated trading and liquidity provision without traditional order books.
Raydium
An automated market maker (AMM) and decentralized exchange (DEX) on the Solana blockchain, enabling fast, low-cost trading and liquidity provision for digital assets with integrated order book functionality.
Price Oracle
A mechanism providing real-time price data for digital assets in DeFi protocols.
Oracle
A mechanism that provides real-world data to blockchains for use in smart contracts.