Visa has published a report on stablecoin-based DeFi lending, highlighting a “new risk model”. That’s because smart contracts mean that loan collateral can be automatically liquidated, reducing counterparty risks. Today the vast majority of DeFi lending is collateral based, something that banks are somewhat familiar with. The report highlights a novel case study.
Much of the paper explores DeFi lending statistics, such as September’s figures of average active loans of $14.8 billion and an average borrowing APR of 6.7% for the year to August 2025.
While most of the report was written by Visa partner Allium, some aspects were penned by Visa, resulting in mixed messages. For example, Visa wrote: “Our goal is to help our network of 15,000+ financial institutions deeply understand this emerging ecosystem and provide them with the necessary infrastructure and capabilities to participate in onchain lending and payments.” But the following paragraph states, “Onchain lending reimagines financial services by using smart contracts to automate and facilitate intermediation instead of traditional institutions.” In other words, onchain lending replaces you, the bank. Perhaps that’s not the message Visa was trying to communicate. Which is where the report seemed to miss a trick or two.
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