“…Despite the impressive growth, the biggest challenge of P2P lending including DeFi lending is the high risk for investors due to moral hazards and adverse selection. 5 For instance, the default rate at Prosper.com, a leading P2P lending platform in the United States, was reported to be 2.6% for A-grade loans and 11.5% for D-grade loans as of May 2017, in contrast to only 1.84% for consumer loans at commercial banks (Dore and Mach, 2020). Unlike crypto mining, stablecoin lending (crypto lending) is attractive to investors as it offers high interest rates.…”