DeFi Comeback Renews Questions of the Sustainability of 20% Returns
- Interest rates to borrow stablecoins in DeFi reach nearly 20%
- Sector rebound is driven by low fees, speculative trading
There are more users transacting on DeFi, borrowing stablecoins on peer-to-peer lenders and providing liquidity in exchange for token rewards.
Photographer: Spencer Platt/Getty ImagesAnother “DeFi Summer” is unfolding in what has traditionally been the most-speculative corner of crypto, with activity surpassing levels seen before the collapse of the TerraUSD stablecoin that sent the sector reeling almost two years ago.
Once again, stablecoins are at the center of activity in decentralized finance, where proponents claim the elimination of intermediaries such as banks and brokers through the use of software-driven applications will democratize finance. Stablecoins, which track a real-world asset like the dollar, allow participants to avoid converting to and from fiat money at every turn in the often volatile sector.