The Core Role, Challenges, and Future Trends of Stablecoins in DeFi Lending Platforms

Abstract

Decentralized finance (DeFi) lending platforms have rapidly evolved within financial markets, with stablecoins playing a pivotal role in these ecosystems by providing price stability and enhancing capital efficiency. However, DeFi lending platforms still face challenges including market volatility, smart contract security, regulatory uncertainty, and liquidity constraints. This paper analyzes the function of stablecoins within DeFi lending platforms, explores their advantages and challenges, and forecasts future development trends. The article first introduces the fundamental concepts and classifications of stablecoins, then analyzes their advantages and challenges within lending markets, and finally looks ahead to innovations and future developments for stablecoins. Through this analysis, the paper provides in-depth insights for researching stablecoin applications in DeFi lending.