Capital-efficiency in lending protocols: escrowed collateral vs collateral rehypothecationIntroductionOver-collateralisation is a powerful mechanism for allowing peer-to-peer (P2P) or peer-to-pool (P2P) lending in decentralised finance (DeFi). Lenders require borrowers to deposit more value in collateral than they take out in loans. This requirement helps ensure that there is always an incentive for borrowers to repay their loans. Where and how collateral is deposited can have a major impact ...