DeFi Lending Rates Tied to US Treasury Yields: Study

A new study from Penn State's Smeal College of Business suggests that decentralized finance (DeFi) lending rates are closely linked to U.S. Treasury yields, contrary to the idea that DeFi operates independently of traditional markets.

The research, published in the Finance Research Letters journal, compared borrowing and deposit rates on Aave, a popular DeFi platform, to U.S. Treasury yields between January 2023 and March 2026.

According to the study, when Treasury yields rise, stablecoin borrowing and deposit rates tend to increase as well. In fact, a quarter-point move in the U.S. 10-year yield is associated with about a one-point move in stablecoin borrowing rates.

This connection may seem counterintuitive given that DeFi operates on a blockchain and does not have direct links to traditional markets. However, the study suggests that investors are making a direct comparison between holding Treasury securities and earning the Treasury rate versus holding stablecoins and earning the DeFi rate.