IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-05572609.html

Rate Discovery in Decentralised Lending

Author

Listed:
  • Charlotte Eli
  • Hervé Alexandre

    (DRM-Finance - DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper introduces a novel framework for rate discovery in decentralised finance (DeFi), focusing on the unique challenges and opportunities within decentralised lending platforms. We explore the mechanisms of interest rate formation in a decentralised environment, without traditional banking institutions' control. By leveraging lending pool dynamics, we propose a method that integrates borrowers' risk profiles with market liquidity conditions to determine fair borrowing rates without third-party involvement. Our model aims to offer a transparent and reliable solution for rate discovery in DeFi. Through a series of simulations, we demonstrate the potential of our framework to improve lending practices in the DeFi ecosystem, making it a viable and competitive alternative to conventional financial systems. The findings suggest that our approach not only enhances the transparency and fairness of the lending process but also encourages a more informed participation of lenders and borrowers, ultimately contributing to the stability and growth of the DeFi market.

Suggested Citation

  • Charlotte Eli & Hervé Alexandre, 2025. "Rate Discovery in Decentralised Lending," Post-Print hal-05572609, HAL.
    • Handle: RePEc:hal:journl:hal-05572609
    DOI: 10.31585/jbba-8-2-(7)2025
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-05572609. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.