Decentralized Finance lending has seemed to hit a pause button in recent years, still going in circles on the old path of over-collateralization.

When Aave and Compound first came out, their gameplay was indeed stunning, but now it seems increasingly awkward: Want to borrow 2 million USD? First, lock in 3 million. This logic just doesn't add up—funding efficiency is outrageously low.

The over-collateralization requirements of traditional lending protocols essentially hold "security" hostage to "efficiency." Users clearly need liquidity, yet they must first sacrifice more liquidity to obtain loans. This paradox can be tolerated in a bull market, but in a bear market, it completely becomes a black hole for funds.

Teams in the market are already trying to break this deadlock, exploring credit lending, partial over-collateralization, and even unsecured models. If the technical solutions can work, DeFi lending may finally graduate from the "collateral era."