*Published: 2023-05-26* Decentralized Finance (DeFi) is like that weird, cool friend you can't fully explain but can't help but admire. It's this amazing open-source, high-speed disruptor that leaves you scratching your head, wondering why anyone would want to use it. I decided to apply for a mortgage a while back. Little did I know what I was getting myself into. I had a bunch of bizarre questions thrown at me. They wanted to know how frequently I get haircuts, the exact number of shirts hanging in my closet, and even my Uber Eats habits. I mean, seriously? As if that's an indicator of my ability to handle a 35-year mortgage. In case you're wondering, I do order food delivery very often. And I have 14 t-shirts. The above experience got me thinking. Is there a better way? Imagine you've got a fat stash of appreciating assets just sitting there, waiting to be put to good use. Now, here's the kicker—you can borrow against those very assets. Yeah, I know, it sounds kinda nuts. Why borrow against something you already own, right? Shouldn't borrowing be about getting your hands on money you don't have? This is the world of over-collateralized loans. It may seem counterintuitive at first. By leveraging your existing assets as collateral, you can secure a loan without breaking a sweat. You only borrow against what you already have to get what you need. The way I like to summarise it is like this: - Under-collateralized loans: borrowing from the future to have something today. - Over-collateralized loans: borrowing from the past (existing assets) to have something today. Under-collateralized loans involve borrowing from the future to have something today. It means obtaining funds that you currently don't possess with the obligation to pay them back in the future. It's essentially borrowing against your future earnings or assets. Over-collateralized loans are borrowing from the past to have something today. You leverage assets or collateral that you already own to secure a loan, tapping into the value you've accumulated in the past. The biggest blocker for us normal people is to own these existing assets in the first place. I came across this post on the /r/ethfinance subreddit that kind of expresses my feelings. > by: usswsbregrets [Permalink](https://www.reddit.com/r/ethfinance/comments/13fbc6v/daily_general_discussion_may_12_2023/jjxvo8x/) > Im still in awe at the simplicity of generating a loan on my assets with loan protocols. Maker was my first experience doing that and I'll never forget that empowering feeling of not having to deal with a bank when I needed some liquid cash. With DeFi, you can drawdown from your on-chain assets, and without getting approval from anyone. The best part is, you don't need to be a baby boomer with a dozen houses to get started. Just stack up some DeFi collateral, bit by bit, and watch your collateral grow organically. It's like building your financial empire brick by brick, without needing a massive fortune to get started. Acquiring collateral in DeFi is a piece of cake. Less paperwork, no stamp duty, no lawyers, no regulations blocking the retail market. You own that asset, and nobody can tell you otherwise. You are part of the cool M0/asset hybrid club. This opens up the door for the average person to build their assets, little by little. DeFi provides simplicity, accessibility, and the freedom to grow your assets on your terms. DeFi is the game-changer that puts the power back in your hands, one niche loan protocol at a time. Its ["Buy, Borrow, Die"](https://smartasset.com/investing/buy-borrow-die-how-the-rich-avoid-taxes), but for normal people.