A Lending Protocol is a decentralized finance (DeFi) system that allows users to lend and borrow cryptocurrencies without the need for traditional banks. These protocols operate on blockchain technology, enabling peer-to-peer transactions where lenders provide funds and borrowers pay interest. Smart contracts automate the process, ensuring security and transparency. Users can earn interest on their crypto assets by lending them out, while borrowers can access funds quickly. Popular examples of lending protocols include Aave and Compound, which facilitate these transactions by matching lenders with borrowers and managing collateral to minimize risk.