Coinbase: The high risk of cryptocurrencies has prompted DeFi lending rates to soar, but eventually DeFi will still become mainstream

Recently, Coinbase published a blog post called "Around The Block". In response to the performance of the DeFi market during the collapse of the crypto market, Coinbase said that because cryptocurrencies are more unstable than cash, they are more risky than other forms of capital. Therefore, crypto lenders in the DeFi market require borrowers to pay higher interest rates. Coupled with a global financial crisis caused by the epidemic, interest rates will become higher. Coinbase said that specifically, part of the reason for the interest rate increase is the increased demand for stablecoins. Most crypto lending platforms such as Dharma belong to a niche market and have their own smart contract risks, while the DeFi platform is a collection of smart contracts that may be vulnerable to attacks. The greater the risk, the higher the interest rate. Coinbase predicts that with the growth of crypto applications, the interest rate of crypto lending will eventually be compressed over time. More loan platforms will accept encryption as collateral, the use of stablecoins will increase, the efficiency of encryption to fiat transactions will be higher, DeFi will become more mainstream, and can better prevent smart contract risks.