Stablecoins provide a lot of the plumbing in the crypto ecosystem. Because there is demand for stablecoins, there is usually an above-average rate for borrowing and lending them. Investors are able to earn interest with stablecoins by depositing into various lending pools. Smart contracts – the code that runs crypto lending pools – are acting as traditional banks in this scenario, where savers are providing the liquidity to borrowers. Unlike traditional finance (TradFi), most liquidity pools provide instant liquidity. This concept is referred to as DeFi, and it is growing in popularity.
How Stablecoins Merge Traditional and Decentralized Finance
