DeFi Lending Explained: Borrowing Against Crypto Instead of Selling
Web3 CMO Stories Podcast – Joeri Billast with Tobias van Amstel (Altitude)
Introduction
In this episode of Web3 CMO Stories, host Joeri Billast speaks with Tobias van Amstel, Co-founder and CEO of Altitude, about how decentralized finance (DeFi) is reshaping borrowing, liquidity, and financial access.
Recorded in Sintra, Portugal, the conversation explores how DeFi lending works, why borrowing against crypto assets changes financial psychology, and what must happen for DeFi to truly democratize finance.
What Is Broken in Traditional Lending?
According to Tobias, traditional finance makes it easy to borrow against future income but difficult to borrow against existing assets.
Banks readily offer loans based on salary.
Borrowing against assets, outside of mortgages, is often difficult.
Existing wealth is less accessible than future earnings.
In contrast, DeFi allows users to borrow directly against digital assets such as Bitcoin (BTC) or Ethereum (ETH), without selling them.
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From Speculation to Real-World Use
Tobias began in DeFi during the early “DeFi summer,” borrowing stablecoins against ETH to earn yield.
The turning point came when he needed liquidity in real life:
Instead of selling ETH, he borrowed against it.
He off-ramped the borrowed funds.
He maintained exposure to ETH’s long-term growth.
This shifted his thinking from speculative yield farming to practical financial utility.
The Psychology of Borrowing vs. Selling
Borrowing against assets changes decision-making.
Example:
Buy Bitcoin at $5,000.
It rises to $100,000.
Instead of selling, you borrow against it.
This creates a third option between holding and selling:
Access liquidity
Maintain asset exposure
Avoid triggering taxable events in some jurisdictions
Selling becomes a choice, not a necessity.
Simple Mental Model: DeFi Lending as a Mortgage
Tobias compares DeFi borrowing to refinancing a home:
Your house is worth $1,000,000.
You owe $500,000.
The bank allows borrowing up to 80 percent.
You borrow $300,000.
You invest at 8 percent.
You pay 3 percent interest.
The net difference reduces your debt.
DeFi operates similarly:
You deposit crypto as collateral.
You borrow stablecoins.
You deploy capital elsewhere.
You maintain ownership of your core asset.
Trust in DeFi: What Users Look For
Trust remains the biggest barrier to adoption.
Tobias identifies three key trust signals:
1. Transparency
Clear protocol rules
Transparent asset flows
Public smart contracts
2. Code Security
Independent audits
Long track record without exploits
Open-source code
3. Team Credibility
Non-anonymous founders
Verifiable backgrounds
Established presence in the ecosystem
In decentralized finance, transparency replaces institutional reputation.
First-Time Borrower Challenges
New users face two main obstacles:
1. Technical Complexity
Choosing wallets
Moving assets off centralized exchanges
Managing gas fees
Understanding security best practices
2. Conceptual Understanding
Learning collateralized borrowing
Understanding loan-to-value ratios
Comparing protocols
Altitude responds by:
Offering a simplified loan optimizer
Aggregating the best rates
Integrating on-ramps and off-ramps
Improving onboarding UX
Understanding Yield in DeFi
Tobias distinguishes four types of yield:
Borrow Yield – Paid by borrowers to lenders
Trading Yield – Generated from trading fees
RWA Yield (Real-World Assets) – Off-chain yield brought on-chain
Incentive Yield – Token rewards from protocols
Each has different risk profiles.
He emphasizes:
Know the source of yield.
Be cautious with illiquid incentive tokens.
Understand whether returns are sustainable or promotional.
Altitude focuses on real, transparent yield sources rather than short-term token incentives.
Building Financial Infrastructure vs. Marketplace Software
As a CEO, Tobias highlights a major shift when building DeFi infrastructure:
In marketplaces, bugs cause frustration.
In DeFi, bugs can cause financial loss.
DeFi requires:
Higher code standards
Extensive testing
Multiple audits
Zero tolerance for critical errors
The standard resembles aviation or medical software, not typical startup software.
DeFi and AI: A Powerful Combination
Tobias sees major implications at the intersection of AI and decentralized finance.
Why DeFi is AI-Friendly:
Blockchain data is public.
Transactions are transparent.
Account balances are visible.
Smart contracts are open.
In traditional finance:
Data is private.
Access is restricted.
Actions require identity verification.
AI agents can:
Analyze public on-chain data.
Execute smart contracts autonomously.
Operate without institutional intermediaries.
However, safeguards are critical. Private key management remains a major risk.
Has DeFi Delivered on Its Promise?
For DeFi to truly level financial playing fields, Tobias believes:
It must remain open.
It must avoid gatekeepers.
It must avoid high minimum investment barriers.
Today:
A $30 million fund can access lending opportunities.
An individual with $100 can access the same opportunity.
If DeFi preserves this symmetry, it fulfills its promise.
If it evolves into a gated institutional system, it loses its edge.
Key Takeaways
DeFi enables borrowing against crypto assets without selling them.
Borrowing changes financial psychology by adding liquidity without exit.
Trust depends on transparency, security audits, and credible teams.
Yield must be understood by source and risk profile.
DeFi’s openness makes it uniquely compatible with AI systems.
True democratization depends on preserving accessibility.
Learn More
Explore Altitude and their DeFi lending platform at:
https://www.altitude.fi
For more strategic conversations on Web3, AI, and modern marketing leadership, explore the Web3 CMO Stories podcast.