User-set Fixed Rate Lending

User-set fixed-rate lending introduces a novel concept to pool-based lending protocol to increase borrower efficiency.

The problem today with current lending markets are:

1. There’s no access to fixed rate lending: Stable rate lending has recently been disabled by Aave and currently there is no decent lending platform out there that gives users an efficient way to lend/borrow against. Oftentimes, users who participate in variable-rate lending end up having to pay high amounts of interest dynamically based on the utilization of a lending pool. The dynamism in lending rates often causes unpredictability with interest costs for borrowers.

2. Users don’t determine the interest payments: Borrowers are subject to interest rates determined by the lending pool.

What is User-set Fixed Rate Lending?

The solution is to create a borrowing interest rate strategy that allows users to set their own rates and also fix rates so that there's no fluctuation in the short/medium term.

1. Fixed rates on a first-come, first-served basis: Users can take loans following an interest rate curve. Interest rates are calculated at the time of taking a loan and are fixed until the loan is paid back. The users who come in first generally get access to lower interest fees. This is very similar to the stable rate borrowing that was recently depreciated in Aave.

2. User-set borrow rates: Allow the user to set borrow rates based on their needs. The more interest a user wishes to pay, the less likely they’d get refinanced.

Inspired by Liquity v2, allowing users to set their borrowing rates gives them the flexibility to choose what kind of interest rates they’d like to pay. This should ideally encourage more borrowing, as borrowers can more accurately determine their costs.