"Interest rates are the most critical factor influencing the appeal of DeFi, as they determine whether investors are more inclined to seek out higher-risk opportunities in decentralized financial markets," analyst Mads Eberhardt wrote.
"As interest rates decrease, the opportunity cost of holding stablecoins diminishes, making them more attractive - much like the broader appeal of DeFi in such an environment," Eberhardt wrote.
Steno notes that the first DeFi summer, in 2020, came hot on the heels of Federal Reserve interest-rate cuts in response to the Covid outbreak.
The continued growth of real-world assets (RWAs) such as tokenized stocks, bonds and commodities is another key factor, and the 50% surge in these assets year-to-date indicates robust demand for on-chain financial products such as DeFi.
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