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  1. Home
  2. /Glossary
  3. /Rehypothecation
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defi

Rehypothecation

Using deposited collateral for additional purposes beyond the original loan, essentially using the same asset multiple times.

Definition

Using deposited collateral for additional purposes beyond the original loan, essentially using the same asset multiple times. In DeFi, this happens when a protocol takes your deposited collateral and lends it out to someone else for extra yield. It increases capital efficiency but adds systemic risk.

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Related Terms

Collateral

Assets you put up as security when borrowing.

Lending Protocol

A DeFi application that lets you lend your crypto to earn interest or borrow against your holdings.

Risk Management

Strategies for limiting potential losses in your investments.

1inch

A DEX aggregator that splits trades across multiple decentralized exchanges to find the best overall price.

Aave

One of the biggest lending and borrowing protocols in DeFi.

Across Protocol

A cross-chain bridge that uses an optimistic verification system and a network of relayers to move tokens between chains quickly.

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