Over time, due to the improving efficiency of the crypto markets, these rates will decrease however borrowing demand continues to increase as DeFi usage and adoption increase.
Notably, the crypto credit markets allow everyone around the world to meet the growing desire for dollars and dollar-denominated debt, in a permissionless and trustless manner which also translates to less overhead and instant settlement (or close), in contrast to traditional finance.
Meltem Demirors, CEO of CoinShares, notes that “the introduction of a robust asset-backed debt market is a game-changer for the crypto ecosystem and many of the companies in it.”
Crypto credit markets are well-positioned to take market share from traditional lending markets, especially as non-crypto companies and individuals with borrowing needs take advantage of the fast-growing infrastructure.
While the crypto credit market is still far smaller in comparison to traditional lending markets, the creation of a new permissionless financial system that is DeFi speaks to the opportunity for this credit market to achieve growth in the coming years. Not to mention that DeFi also brings the ability to provide working capital for companies and individuals.
Eventually, this emergent and new global financial system will reach far beyond traders and crypto users alone, even if its inception may have been born out of necessity for their initial use.