Ava Labs x CBER Ep 4: Economics of Lending Platforms

This episode discusses lending platforms on blockchains. Thomas Rivera (McGill University) and Quentin Vandeweyer (University of Chicago) explain that lending platforms generate sub-optimal welfare due to under-utilization of funds that are lent to the platform. To provide more context, lending platforms are specified in such a way that the level of borrowing (relative to lending) necessarily fluctuates with market conditions, resulting in instances where borrowing is significantly below lending. Importantly, when borrowing is significantly below lending, the total interest accrued from borrowers (relative to lending volume) is necessarily low, yielding low interest rates for lenders and thereby discouraging lending. Potential improvements for lending platforms are discussed.

Paper: Equilibrium in a DeFi Lending Market

View on Zencastr

The Speakers

Thomas Rivera - Assistant Professor of Finance at the Desautels Faculty of Management, McGill University.

Thomas Rivera

Assistant Professor of Finance at the Desautels Faculty of Management, McGill University.

Quentin Vandeweyer - Assistant Professor of Finance and Fama Faculty Fellow at the University of Chicago.

Quentin Vandeweyer

Assistant Professor of Finance and Fama Faculty Fellow at the University of Chicago.

Andreas Park - Professor of Finance, University of Toronto.

Andreas Park

Professor of Finance, University of Toronto.

Fahad Saleh - Associate Professor of Finance and the Nunnenkamp-Cinelli Faculty Fellow at Wake Forest University.

Fahad Saleh

Associate Professor of Finance and the Nunnenkamp-Cinelli Faculty Fellow at Wake Forest University.

About our guest speakers

Thomas Rivera is a Professor of Finance at the Desautels Faculty of Management of McGill University whose research broadly relates to theoretical topics on blockchain, decentralized finance, corporate finance, and banking/financial stability.

Quentin Vandeweyer is Professor of Finance and Fama Faculty Fellow at the University of Chicago: Booth School of Business. His research interests are in macro-finance, asset pricing, and monetary economics. In particular, his recent research focuses on understanding how financial innovation and regulation drive the development of financial institutions. Vandeweyer holds a Ph.D. in Economics from Sciences Po Paris and an MSc. in Economics from Ecole Polytechnique. Prior to joining Booth, he was working for the European Central Bank.

Birds of a feather can make progress together

At Owl Explains, we collaborate with trade associations, think tanks, policymakers, and industry partners to further understanding of blockchain, crypto, and Web3.

Owl Explains Owl Mascot