The failure of fixed-rate lending in the crypto space is not solely due to DeFi users rejecting it. It also reflects a mismatch between money-market designs and actual capital behavior in a liquidity-driven ecosystem, which has kept fixed-rate lending in a niche. Today, most mainstream lending protocols are building fixed-rate products, largely driven by real-world assets, and borrowers crave certainty—fixed payment methods, known terms, and no unexpected repricing. If DeFi is to operate like real finance, fixed-rate lending should play a core role.
However, each cycle has been quite the opposite. The floating-rate money market is vast, while the fixed-rate market remains sluggish. Most “fixed” products ultimately perform like niche bonds held to maturity, reflecting the composition of market participants and the way these markets are designed. Fixed-rate loans work effectively in the traditional financial system because that system is built around time.
The key is not the existence of fixed-rate loans, but that there will always be someone to absorb mismatches when the terms of the borrowing parties do not align perfectly. DeFi has never built such a system. It is more like an on-demand money market, where fund providers seek to earn returns on idle funds while maintaining liquidity, causing many products to resemble cash rather than true credit. A pragmatic path forward is a hybrid model: floating rates as the base layer for capital storage, with fixed-rate tools as optional duration exposure for those seeking certainty; early exits should be priced, and deeper secondary markets should support them.
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