Bonded finance refers to the concept of locking up assets in a smart contract as collateral to access liquidity. This process allows users to utilize their assets without having to sell them, providing a way to leverage their holdings in the crypto market. By bonding their assets, users can borrow against them and gain access to capital while maintaining ownership of their original assets.
The bonded finance model creates a more secure system for borrowing and lending in the cryptocurrency space, as it reduces the risk of default by requiring users to lock up collateral in the form of crypto assets. This collateral acts as a guarantee for the lender, ensuring that the borrower has a stake in the success of the transaction.
Overall, bonded finance is a mechanism that promotes liquidity and efficiency in the cryptocurrency market by providing a secure way for users to access capital using their existing assets as collateral. It offers individuals the opportunity to leverage their holdings and participate in various financial activities without the need to sell their assets.
