Interest Rate as a Key Parameter in Decentralized Financial Systems

Abstract

Decentralized lending is one of the key services in the field of decentralized finance. Due to its specifics, DeFi attracts participants all over the world, allowing you to fully take advantage of blockchain technologies. This article presents arguments emphasizing the key importance of interest rates in shaping the behavior of participants, allocating resources, and balancing supply and demand of financial products and services. The article also examines the impact of interest rates on the stability and efficiency of decentralized financial systems. In addition, it examines various approaches to setting interest rates in these ecosystems, including market mechanisms and algorithmic models.