Ever seen a bank offer the same interest rate for a loan against a car and a house just because you’re borrowing USD in both cases? No? That's because it doesn't make any sense. And yet, over $20B in DeFi is lent on that exact logic. 📴 The Broken Onchain Interest Rates Most onchain lending protocols set borrow rates purely based on the debt asset and its utilization. It doesn’t matter whether your collateral is a volatile long-tail asset or a blue-chip, if you’re borrowing USDC, you pay the USDC borrow rate. The risk isn't priced in... 🏦 What Institutions Expect Institutions, though, don't work that way. They have spent decades and billions building lending frameworks to determine interest rates based on factors like • Quality of collateral • Type of loan • Macro environment. An institution's goal is to ensure the interest rates are as risk adjusted as possible - a complete mismatch with most of the existing onchain lending infra. How do we solve it? ⚖️ Risk Adjusted rates on Gearbox Traditional onchain lending with pooled borrowing generalises users and risk, leading to generalised rates. Gearbox's Credit Accounts fix this • Each user’s position is isolated. • The accounts can determine the collateral(s) and the associated risk. • Borrowers pay rates based on the actual risk of their collateral. Unlocking the ability to price loans like institutions expect, properly risk-adjusted. And with permissionless launching soon, institutions will be able to expand their operations onchain not just faster than you can get your Uber Eats delivered but with the risk frameworks onchain lending has been missing. ⚙️🧰 You can read more about how Gearbox's architecture creates institutional-grade lending with risk-adjusted rates here: