Non-custodial lending refers to a system where borrowers can take out loans without giving control of their assets to a third party. Instead of relying on a centralized entity, users maintain ownership of their assets throughout the lending process.In this setup, smart contracts manage transactions automatically. Borrowers pledge collateral, usually in the form of cryptocurrency, which is locked in the contract. If they repay the loan with interest, they regain access to their collateral. If they fail to repay, the smart contract automatically liquidates the collateral to cover the loan.This method enhances privacy and security, as users are not required to provide personal information to a centralized platform. It also reduces the risk of loss if a platform faces hacks or mismanagement.Non-custodial lending has gained popularity for its decentralized nature, empowering users to control their own funds while accessing the benefits of lending and borrowing without traditional financial intermediaries.