DeFi's Missing Primitive, Fixed-Rate Credit
Summary
Onchain credit is overwhelmingly variable-rate. Traditional finance is not. This mismatch limits predictability, planning, and scale in DeFi. Fira introduces fixed-rate borrowing and lending as a native onchain primitive, starting from an already proven fixed-rate product: the Usual Stability Loan.
The Current State of Onchain Credit
Most DeFi lending protocols rely on utilization-based interest rates. Borrowing costs adjust continuously based on supply and demand for liquidity.
This model is effective for short-term capital efficiency. It is not designed for duration-based credit.
Today, DeFi lending markets represent more than $60B in total value locked. Over 99% of this exposure is floating-rate.
As a result:
Borrowers cannot fix their cost of capital.
Lenders cannot forecast returns with certainty.
Protocol treasuries lack visibility into future obligations.
Interest rates react to capital flows, not to loan maturity or risk over time. This limits the usefulness of onchain credit for long-horizon strategies, structured positions, and treasury management.
Fixed-Rate Credit as a Financial Primitive
In traditional finance, fixed-rate credit is foundational.
Mortgages, corporate debt, and sovereign bonds are issued with defined maturities and known interest rates. This structure enables planning, hedging, and balance-sheet management.
Globally, traditional markets support over $145T in fixed-rate credit. This scale is not incidental. It reflects the role fixed rates play in making credit usable beyond short-term liquidity needs.
DeFi lacks this primitive today.
Without fixed-rate borrowing and lending, onchain credit remains structurally constrained. For DeFi to support more complex financial activity, fixed-rate credit must exist alongside variable-rate markets.
USL: Demonstrated Demand for Fixed Rates Onchain
The Usual Stability Loan is the most successful fixed-rate credit product deployed onchain to date.
USL offered:
Borrowing at a fixed 5% interest rate
Loans collateralized by USD0
A structure enabling delta-neutral strategies against variable bUSD0 yields
The product scaled organically to more than $400M in outstanding loans in under six months. Growth was driven by usage, not by temporary incentives.
This demonstrated two things:
Fixed-rate borrowing is viable onchain.
There is sustained demand for predictable credit terms.
USL serves as the first clear proof that fixed-rate credit is a missing but necessary component of DeFi.
Fira’s Design Objective
Fira is designed specifically to support fixed-rate credit onchain.
Rather than adapting variable-rate markets, Fira introduces maturity-based lending and borrowing as a core system property. Rates are discovered for defined terms, enabling users to select both duration and cost of capital.
Building on the success of USL, Usual will deploy its first market on Fira, the Usual Zero Rate (UZR), during the ignition phase.
UZR will form the initial foundation of Fira’s credit layer. Fira provides the framework to extend fixed-rate credit across assets, maturities, and use cases.
Fira does not replace variable-rate liquidity markets. It completes the credit stack by adding a missing primitive: predictable, maturity-based credit for onchain finance.
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