# Fixed-rate, fixed-term loans seen as key to expanding real-world assets in DeFi

By John Kim

Canonical URL: https://www.tokenpost.com/news/insights/37791
Published: 2026-10-22T11:40:44.000Z
Updated: 2026-10-22T11:40:44.000Z
Section: Insights & Views

> Fixed-rate, fixed-term loans could expand institutional RWA strategies in DeFi, CoinDesk said, by aligning borrowing costs and maturities with underlying assets.

Fixed-rate, fixed-term lending could expand institutional investment in real-world assets in decentralized finance by making borrowing costs and repayment dates predictable. Locking in financing below an asset’s yield would let investors borrow against their holdings and reinvest the proceeds.

In its “Why real-world assets need fixed-rate loans onchain” report published on October 21, 2026, CoinDesk said stablecoin supply was holding around $300 billion and aggregate vault assets were approaching $20 billion. Morpho alone had more than $16 billion in deposits, mostly in variable-rate markets where borrowing costs depend on pool utilization.

The report described fixed-rate lending as a way to bring a longstanding credit-market strategy into DeFi: buy an income-producing asset, borrow against it at a locked rate below its yield and use the proceeds to buy more. That strategy has yet to gain meaningful traction in DeFi. Variable-rate markets suit crypto-native traders managing liquid positions in real time, but leave longer-term borrowers exposed to uncertain costs.

Fixed-rate, fixed-term loans can align financing with the duration of collateral, particularly for real-world assets whose redemptions settle between T+7 and T+90. Knowing the borrowing cost and maturity upfront allows institutions to assess vaults that repeatedly borrow and reinvest against these assets using conventional term-financing criteria, CoinDesk said. The report compared $51 trillion in U.S. fixed income with $1.6 trillion in floating-rate leveraged loans.

The shift is already underway, according to the report. Morpho opened fixed-rate, fixed-term markets through Morpho Midnight, which Coinbase used to launch fixed-rate crypto-backed loans for customers in September 2026.

Slow redemptions expose borrowers to variable-rate spikes

CoinDesk described DeFi as a tested real-time execution system with a narrow collateral base dominated by volatile crypto assets. The report linked that structure to the $19 billion liquidation cascade on October 10, 2025, which marked the start of a nearly 60% decline in DeFi total value locked over the following eight months.

Expanding beyond crypto requires real-world assets whose performance is not correlated with crypto prices, supported by lending markets that better match their characteristics, the report argued. Such assets already back major stablecoins: Ethena and Sky have committed more than $2.4 billion to JAAA, BUIDL, STAC and USTB.

Leveraged real-world asset strategies onchain currently rely almost entirely on variable-rate pools, where utilization determines borrowing costs. The report illustrated the risk with Aave’s rate curve: as utilization rises from 92% to 100%, the USDC borrowing rate climbs from 4% to 14%.

By comparison, JAAA yields 4.5% to 5%, while Maple’s syrupUSDC pays 5.2%. The one-year average USDC borrowing rate on Aave V3 Ethereum was 4.56%, leaving a spread of roughly 0.5 percentage points, according to CoinDesk. Borrowing-rate volatility can discourage investors from repeatedly borrowing and reinvesting against real-world assets, or restrict them to double-digit-yielding products, narrowing the available investment-grade credit universe.

The report cited Coin Metrics findings of recurring daily utilization spikes in a $2 billion pool. During the April 2026 KelpDAO rsETH exploit, Aave’s USDC pool remained at 100% utilization, leaving borrowers paying the maximum 14% rate for five days. With tokenized credit redemptions taking anywhere from T+1 to well beyond T+90, borrowers can remain trapped in an unprofitable position while waiting to exit.

Matching loan terms to asset duration could expand institutional participation

Fixed-rate, fixed-term lending lets allocators match a loan’s duration to that of the underlying asset, CoinDesk said, comparing it with a bank advancing 70% against investment-grade paper at a fixed spread. Tenor Finance, Kamino, Term Labs and Loopscale already quote borrowing rates against specific products.

A Kamino market offers 5.3% fixed-rate loans against Figure’s auto loan portfolio on rolling 30-day terms. Combined with services that execute multiple borrowing and reinvestment loops in a single transaction, these markets could allow institutions to underwrite larger leveraged real-world asset positions, the report said.

CoinDesk illustrated the potential scale with a hypothetical 5% allocation from Sky and Ethena’s $12 billion in reserve capital. That would provide $600 million in equity and, at 3x leverage, generate $1.8 billion in real-world asset demand, before contributions from foundations, digital asset treasury companies and exchange Earn programs. The report identified issuers of underwritten assets that support repeated borrowing and reinvestment, with returns uncorrelated with crypto, as potential beneficiaries of a broader DeFi collateral base.