Crypto lending risks: Liquidation, protocol failure, insurance gaps detailed

Crypto lending exposes both borrowers and lenders to a range of risks, including forced liquidations, potential software vulnerabilities, and the possibility of fund loss if a provider fails. The level of exposure varies depending on whether lending occurs through centralized companies or decentralized onchain protocols. Displayed interest rates do not represent the full risk profile of crypto lending. Collateral loss remains a primary concern, especially during sharp price declines. Borrowers risk having their collateral liquidated if asset values fall below required thresholds.