Decentralized Finance (DeFi) lending protocols implement programmable credit markets without intermediaries. T

his paper systematizes the DeFi lending ecosystem, spanning collateralized lending (including over- and under- collateralized designs, and zero-liquidation loans), uncollateralized primitives (e.g., flashloans), and yield aggregation protocols which allocate capital across underlying lending platforms.

Beyond a taxonomy of mechanisms and comparing protocols, we provide empirical on-chain measurements of lending activity and user behavior, using Compound V2 and AAVE V2 as case studies, and connect empirical observations to protocol design choices (e.g., interest-rate models and liquidation incentives).

We then characterize vulnerabilities that arise due to notable designs, focusing on interest-rate setting mechanisms and time-measurement approaches. Finally, we outline open questions at the intersection of mechanism design, empirical measurement and security for future research.

A. Kotzer, T. Azoulay, Y. Abels, A. Yaish, O. Rottenstreich, SoK: DeFi Lending and Yield Aggregation Protocol Taxonomy, Empirical Measurements, and Security Challenges, IEEE Transactions on Network and Service Management 23 (2026) 4982-4997.