Lending pools are a type of liquidity pool that enables peer-to-peer (P2P) lending. Users must provide adequate asset collateralization when borrowing from a lending pool. For example, if the collateralization ratio to borrow against USD coin (USDC) is 200% and the user provides $1,000 USDC, the user cannot borrow more than $500 USD. Users who lend their assets are compensated with a percentage of the total amount lent. Smart contracts automate the lending and borrowing process by setting different lending rates based on the assets and protocols involved.