A reverse repo, or reverse repurchase agreement, is a financial transaction where one party sells an asset to another with an agreement to repurchase it later at a higher price. This process allows the seller to obtain liquidity while still retaining ownership of the asset.In the context of cryptocurrency, reverse repos can involve crypto assets, particularly in decentralized finance (DeFi) platforms. These transactions enable investors to temporarily lend their crypto assets, receiving interest income in return. The borrower, needing funds, sells the crypto with the commitment to buy it back later.This mechanism serves multiple purposes. For lenders, it offers a way to earn passive income from assets that would otherwise remain idle. For borrowers, reverse repos provide necessary liquidity without permanently losing their holdings.Overall, reverse repos contribute to market efficiency by facilitating short-term borrowing and lending in the cryptocurrency ecosystem, enhancing liquidity, and allowing participants to manage their assets more flexibly.