Decentralized finance ("DeFi") lending, one of the fastest-growing sectors in the decentralized ecosystem, could eventually make inroads into the real economy if it becomes less reliant on collateral, the BIS said in a recent report, adding that it also needs to better represent real-world assets on the blockchain via tokenization. Note that DeFi lending platforms like Celsius and BlockFi allow anonymous users to lend and borrow cryptocurrencies at high interest rates that far exceed what traditional lenders offer to depositors. The problem is that DeFi lending relies heavily on borrowers pledging crypto collateral, limiting "access to credit to borrowers who are already asset-rich," the BIS said. If high price volatility takes hold in digital coins — as is the case now — "there is overcollateralization: the collateral required tends to be much higher than the loan size." Another concern is the lenders offer crypto loans without a central intermediary like
