THE BULL CASE FOR ON-CHAIN LENDING

Summary from the TLDR Crypto newsletter

On-chain lending protocols are experiencing a cyclical downturn as capital exits due to rates falling, driven by weak borrow demand and structural inefficiencies like cash drag and rehypothecation restrictions. The sector is positioned for growth through institutional-grade collateral integration, protocol upgrades enabling fixed-term loans and whitelisting, and high-yield tokenized products like Figure's 8% HELOC offerings. Despite bearish conditions, the sector trades at 21x-42x P/S versus 8.4x for traditional fintech lenders, though multiples are compressing as token prices decline while protocol fundamentals strengthen.