Introduction “As long as the code is sufficiently decentralized, there is no legal entity, so regulators have nowhere to start.” — This was once regarded as a safe haven by many on-chain lending entrepreneurs. They tried to build an “algorithmic bank” with no CEO and no headquarters. However, with the enforcement action in the US Ooki DAO case, this “de-entity” invisibility cloak is being pierced by regulators layer by layer. Under a stricter “look-through regulation” approach, how much further can on-chain lending go? On-Chain Lending: Web3’s Autonomous Bank On-chain lending can be understood as an automated lending machine with no human operators. Its main functions include: Automated liquidity pool: Lenders deposit funds into a public pool managed by code and immediately start earning interest. Over-collateralization: Borrowers must pledge assets worth more than the loan amount to control risk. Algorithmic interest rates: The interest rate is dynamically set by algorithms based on the supply and demand of funds.