How Does Lending against Collateral Differ from Minting a Stablecoin?

Lending against collateral involves borrowing a pre-existing asset (like ETH or a stablecoin) from a lending pool by posting collateral, with the debt being the borrowed asset. Minting a stablecoin against collateral involves creating a new asset (the stablecoin) by locking collateral in a smart contract, with the debt being the newly minted stablecoin.

In lending, the asset already exists; in minting, the asset is created. Both are over-collateralized but serve different functions in DeFi.