At its core, the emerging DeFi lending market is built around a simple but powerful mechanism:Depositors in DeFi provide USD liquidity.Borrowers use that liquidity to fund leveraged crypto basis trades — typically the difference between perpetual swaps and spot prices across exchanges.This means that DeFi borrow rates are determined by two supply/demand dynamics:The demand for crypto leverage (e.g. via perps), andThe availability of capital from DeFi depositors.Compliance and InsuranceFor DeF...