Variable Interest Rate (Lending)
An interest rate that fluctuates based on lending pool utilization and market conditions.
What is Variable Interest Rate (Lending)?
Variable interest rates in DeFi lending adjust dynamically with supply and demand in lending pools. For example, Aave’s USDC borrow rate might rise from 5% to 8% as utilization jumps from 60% to 90%. Suppliers benefit from higher rates during peak demand, while borrowers face increased costs. Most DeFi protocols, like Compound, default to variable rates.
In 2025, variable rates for stablecoins average 4–10%, per DefiLlama, with spikes during market rallies. Users monitor rates via aggregators to optimize strategies, though volatility can challenge predictability.
Related Terms
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Payments using digital assets to facilitate fast, low-cost international transactions.
Linea Chain
Consensys' zero-knowledge Ethereum Layer 2 rollup, emphasizing privacy and ETH economy strengthening through burn mechanics.
Core Personal Consumption Expenditures (Core PCE)
A variant of PCE excluding volatile food and energy prices to gauge underlying inflation trends, favored by the Fed for policy decisions.
Herd Behavior/Bandwagon Effect
The tendency of prediction market participants to follow prominent public signals, potentially distorting prices.
Cross-Chain Swap
A cross-chain swap is the exchange of digital assets between two different blockchain networks, facilitated by bridges or protocols to enable interoperability.
BTC nav (MSTR)
Strategy's Bitcoin holdings valued at current market price, excluding liabilities.