What is fixed-rate lending in DeFi?

A loan where the interest rate, and usually the maturity, is set at the start, so the lender knows the yield and the borrower knows the cost. Most DeFi lending uses variable rates that move with pool utilisation. Of the $28.5 billion in active DeFi loans at the time of the report, almost all was variable-rate.

Why has fixed-rate lending been hard to build onchain?

Three problems held back earlier versions. Liquidity splits across maturities, rates and collateral, so each market is thin. Lenders cannot exit before maturity unless someone buys their position. And capital sits idle while it waits for a match. Newer designs answer with multi-market offers, tradable positions and capital that keeps earning variable yield until a loan is matched.

How does Morpho Midnight work?

Midnight, launched by Morpho in July 2026, is intent-based zero-coupon lending. Lenders and borrowers post offers that do not lock capital, and capital only moves when a match settles. Positions are credit units and debt units that can be traded, so lenders can exit early by selling credit units and borrowers can buy debt units back. It reached $2 million in active loans by the end of August.

What is Tenor Finance?

An access layer built on Morpho Midnight, which DeFi Frontier calls the HIP-3 of Midnight. It adds auto-renewal through independent keepers, a fallback to Morpho Blue's variable rate when no fixed match exists, onchain OTC quotes with whitelisted counterparties, and organisation accounts that can run KYC-gated credit markets.

How does Jupiter Offerbook avoid liquidations?

Loans run for fixed terms, usually 1 to 30 days, and there is no price-based liquidation. If the borrower does not repay at maturity, the lender claims the collateral. That lets lenders accept long-tail collateral such as NFTs or RWAs with no active price discovery, as long as they are willing to underwrite it. Offerbook had $450,000 in active loans.

How do TermMax and Fira compare to Pendle?

Both split a loan into a fixed claim and a floating piece, as Pendle does. TermMax's Fixed Rate Token (FT) redeems for one unit of the loan asset at maturity and trades at a discount before then, like Pendle's PT. Fira's Bond Token (BT) works the same way, and its Coupon Token (CT) carries the floating yield, like YT. Fira had $430 million in active loans, almost all in its Usual Zero Rate market; TermMax had $30 million.

What risks remain with fixed-rate loans?

Fixed rates make the cost of debt explicit but do not remove collateral, default, redemption, solver, LP or refinancing risk. In Liquity V2 and Flex, borrowers who pick a low rate are first in line to be redeemed. If rates run far enough past an IRIS Credit solver's quote, the solver's bond runs out and the borrower pays the floating rate. Term Labs was hit by an $8.5 million governance exploit in its Meta vaults.

Research/Flagship Reports

Published August 202634 pagesNoveleader

Fixed-Rate Lending: Market Structure and Protocol Design

A report on the protocols building fixed-rate and fixed-maturity credit products

Data snapshot: August 2026. Figures are preserved from the published report; charts marked updated daily use live data.

Get the Full Report →

“Fixed rates do not remove any risk that variable-rate lending has uncovered over the years, but they make the cost of debt explicit.”

Fixed-Rate Lending: Market Structure and Protocol Design cover

▮ The numbers that matter

$28.5B

Active loans across DeFi lending markets

$430M

Fira active loans, the largest fixed-rate market

$4B+

Capital in Morpho Vaults available to future Midnight adapters

$2M

Active loans in Morpho Midnight by the end of August

$450K

Active loans in Jupiter Offerbook

1-30 days

Typical Jupiter Offerbook loan terms

Executive Summary

DeFi lending supports $28.5 billion in active loans, but almost all demand remains in variable-rate markets. The report compares fixed-rate and fixed-maturity designs that make borrowing costs explicit while addressing fragmented liquidity, idle capital and early exits. It covers incumbent-led models from Morpho, Jupiter and Kamino alongside purpose-built markets including Term Labs, TermMax, Fira, Loopscale, Liquity, Flex and IRIS Credit.

Key findings

01DeFi lending had $28.5 billion in active loans at the report snapshot, with almost all demand still served by variable-rate markets.
02Morpho Midnight uses tradable credit and debt units to improve early exits and had reached $2 million in active loans by the end of August, after its July launch.
03Jupiter Offerbook had reached $450,000 in active loans using fixed terms of one to 30 days and maturity-based collateral transfer instead of continuous liquidation.

Covered in the report

Morpho MidnightTenor FinanceJupiter OfferbookKaminoTerm LabsTermMaxFiraLoopscaleLiquity ProtocolFlexIRIS CreditAave Stable Vaults

Inside

01Introduction
02Different Answers to the Same Credit Problem
03Variable-Rate Incumbents Entering Fixed-Term Markets
04Purpose-Built Fixed-Rate Credit Markets
05Emerging Models for Predictable Credit
06Curator-Built Fixed-Rate Markets
07Closing Thoughts

Read the full report, free →

Fixed-Rate vs Variable-Rate Lending in DeFi

DeFi lending had $28.5 billion in active loans at the time of the report, and almost all of it was variable-rate. Variable pools solved instant borrowing against collateral, but the rate follows a utilisation curve. In a stress event that curve moves, rates spike, and borrowers are forced to exit or deleverage. Fixed-rate and fixed-maturity markets let lenders know their yield and borrowers know their cost before the loan starts.

Demand comes from three groups. Date borrowers, such as funds, treasuries, RWA issuers and basis desks, need debt that matures when an asset, redemption window or strategy does. Certainty borrowers, such as loopers and levered yield users, need a stable cost so their spread does not shrink. Lenders and curators want to choose duration, collateral and return instead of taking whatever utilisation produces.

Castle Labs — Now, 23 Oct 2026Active loans: $30.68B
In the report, August 2026Almost all of the $28.5 billion is variable-rate debt, priced by utilisation curves that can spike in a stress event.
Report page 4

Date	Active loans
12 Oct 2026	$30.74B
13 Oct 2026	$30.51B
14 Oct 2026	$30.51B
15 Oct 2026	$30.21B
16 Oct 2026	$30.19B
17 Oct 2026	$30.2B
18 Oct 2026	$30.09B
19 Oct 2026	$30.12B
20 Oct 2026	$30.1B
21 Oct 2026	$30.72B
22 Oct 2026	$30.91B
23 Oct 2026	$30.68B

Why earlier fixed-rate markets struggled, and how new designs answer

Problem	What goes wrong	How new designs answer it
Fragmented liquidity	Liquidity splits by maturity, rate, collateral and duration, so each market is thin	Multi-market offers (Morpho Midnight), rate and duration grids (Kamino), virtual markets (Loopscale)
No early exit	Lenders are stuck until maturity unless someone buys their position	Tradable credit and debt units (Midnight), discounted bond tokens on an AMM (TermMax, Fira), a FIFO withdrawal queue (Kamino)
Cold start	Capital sits idle, earning nothing, while it waits for a match	Capital moves only when a match settles and earns variable yield until then (Midnight, Term V2, Jupiter Offerbook, Kamino)
Maturity	Borrowers may repay, roll, fall back to variable debt or fail to repay	Auto-roll with a fallback to variable rates (Tenor, Kamino); auto-refinancing with 48 hours to repay (Loopscale)

Source: Castle Labs, Fixed-Rate Lending: Market Structure and Protocol Design (August 2026)

Morpho Midnight vs Jupiter Offerbook vs Kamino: How the Big Lenders Do Fixed Rates

Morpho, Jupiter and Kamino all run large variable-rate markets, and in 2026 each added fixed terms in a different way. Morpho built a separate protocol with tradable positions. Jupiter built an intent-based book with no price-based liquidation. Kamino added fixed-rate reserves inside its existing lending market, so borrowers see a term structure next to the variable rate they already use.

Date	Active loans
12 Oct 2026	$4.67M
13 Oct 2026	$4.67M
14 Oct 2026	$4.47M
15 Oct 2026	$4.46M
16 Oct 2026	$4.94M
17 Oct 2026	$5.39M
18 Oct 2026	$5.41M
19 Oct 2026	$5.44M
20 Oct 2026	$6.44M
21 Oct 2026	$8.89M
22 Oct 2026	$9.86M
23 Oct 2026	$36.65M

Fixed-rate products from variable-rate incumbents, August 2026

Protocol	Design	Exit before maturity	At maturity	Active loans
Morpho Midnight (launched July 2026)	Intent-based zero-coupon lending; positions are credit units and debt units, and their price sets the rate	Lenders sell credit units; borrowers buy debt units to cut what they owe	Tenor, built on Midnight, rolls loans through keepers and falls back to Morpho Blue's variable rate	$2M; Morpho Vaults hold over $4B that can quote once the vault adapter ships
Jupiter Offerbook (public beta June 2026)	Intent-based book with terms of 1 to 30 days and no price-based liquidation	Short fixed terms instead of a secondary market	If the borrower does not repay, the lender takes the collateral	$450K
Kamino Fixed Rate Lending (whitepaper)	Fixed-rate reserves inside Kamino Lend, laid out as a grid of rates and durations	FIFO withdrawal queue; the wait is capped by the reserve's duration	Auto-roll into the next term, or fall back to the variable rate	Whitepaper stage at publication

Source: Castle Labs, Fixed-Rate Lending: Market Structure and Protocol Design (August 2026)

Tenor Finance, which DeFi Frontier calls the HIP-3 of Midnight, is the access layer on top. It adds auto-renewal, onchain OTC quotes shared with whitelisted counterparties, and organisation accounts that let institutions run gated credit markets with their own KYC rules. The Tenor team expects asset managers on one side and businesses on the other.

The Main Fixed-Rate Lending Protocols in 2026

Purpose-built protocols set the fixed rate in different ways: auctions, AMM curves, order books or rates the borrower picks. Fira has by far the most active loans at $430 million, but almost all of that is its Usual Zero Rate market, so it is not directly comparable with multi-market venues.

Date	Active loans
12 Oct 2026	$438M
13 Oct 2026	$438M
14 Oct 2026	$437M
15 Oct 2026	$437M
16 Oct 2026	$437M
17 Oct 2026	$436M
18 Oct 2026	$436M
19 Oct 2026	$436M
20 Oct 2026	$438M
21 Oct 2026	$438M
22 Oct 2026	$438M
23 Oct 2026	$438M

Purpose-built fixed-rate protocols, August 2026

Protocol	How the rate is set	Active loans	Notable detail
Fira	Borrowers sell a Bond Token (BT) at a discount on a BT/FW AMM; BT works like Pendle's PT and the Coupon Token (CT) like YT	$430M, almost all from Usual Zero Rate (UZR)	Interest is built into the discount at origination, not charged over time
Loopscale	Credit order book of bilateral loans; virtual markets pool liquidity by collateral, loan asset and duration	$55M	Auto-refinances at maturity and gives 48 hours to repay if no lender is found; curator vaults for passive lenders
Liquity V2	Borrowers pick their own rate when minting BOLD against ETH, wstETH or rETH	$32M of BOLD in circulation	If BOLD trades below peg, the lowest-rate borrowers are redeemed first
TermMax	Fixed Rate Token (FT) trades at a discount like a zero-coupon bond; 1 FT + 1 XT = 1 debt token	$30M	Lenders quote by size, for example the first $10K at 5% and the next $10K at 5.5%
Term Labs	Auction where every bid clears at one rate; Term V2 (early August 2026) adds intent-based matching	$3.7M	Hit by an $8.5M governance exploit in its Meta vaults
Flex	Borrowers pick their rate, as in Liquity V2; lender exits redeem the lowest-rate Troves first through a collateral auction	About $900K two months after launch	Bad debt from underwater liquidations can be spread across the lender vault
IRIS Credit	Solvers quote a fixed rate and refinance across lending venues, posting bonds sized from a three-year simulation	Pre-launch	Takes blue-chip collateral because it has a rate history to model

Source: DefiLlama data in Castle Labs, Fixed-Rate Lending (August 2026)

Curators are building fixed rates too. KPK runs a fixed-rate ETH lending vault on Euler with about $700K in deposits. Its borrow rate resets once a month at 90% of Treehouse's ETH staking-yield benchmark minus 20 bps, which makes looping costs predictable. Aave launched Stable Vaults in July, an early sign of predictable credit products from the largest lender.

More Charts From the Report

9 charts from the 34-page PDF on this page, each with the number that matters.

Date	Active loans
12 Oct 2026	$50.19M
13 Oct 2026	$49.65M
14 Oct 2026	$49.53M
15 Oct 2026	$49.31M
16 Oct 2026	$48.97M
17 Oct 2026	$48.92M
18 Oct 2026	$48.84M
19 Oct 2026	$48.76M
20 Oct 2026	$48.83M
21 Oct 2026	$48.95M
22 Oct 2026	$49.01M
23 Oct 2026	$49.08M

Date	BOLD in circulation
12 Oct 2026	$37.75M
13 Oct 2026	$38.01M
14 Oct 2026	$38.06M
15 Oct 2026	$38.12M
16 Oct 2026	$37.84M
17 Oct 2026	$38.01M
18 Oct 2026	$38.1M
19 Oct 2026	$38.07M
20 Oct 2026	$38.21M
21 Oct 2026	$38.19M
22 Oct 2026	$38.13M
23 Oct 2026	$38.25M

Date	Active loans
12 Oct 2026	$28.12M
13 Oct 2026	$27.94M
14 Oct 2026	$28.1M
15 Oct 2026	$27.96M
16 Oct 2026	$28.01M
17 Oct 2026	$21.05M
18 Oct 2026	$21.05M
19 Oct 2026	$21.05M
20 Oct 2026	$21.05M
21 Oct 2026	$21.05M
22 Oct 2026	$21.05M
23 Oct 2026	$21.05M

Date	Active loans
12 Oct 2026	$2.97M
13 Oct 2026	$2.96M
14 Oct 2026	$2.97M
15 Oct 2026	$2.96M
16 Oct 2026	$2.96M
17 Oct 2026	$2.96M
18 Oct 2026	$2.96M
19 Oct 2026	$2.96M
20 Oct 2026	$2.96M
21 Oct 2026	$2.96M
22 Oct 2026	$2.96M
23 Oct 2026	$2.96M

Date	Active loans
12 Oct 2026	$1.19M
13 Oct 2026	$1.21M
14 Oct 2026	$1.41M
15 Oct 2026	$1.37M
16 Oct 2026	$1.38M
17 Oct 2026	$1.37M
18 Oct 2026	$1.64M
19 Oct 2026	$1.64M
20 Oct 2026	$1.64M
21 Oct 2026	$1.65M
22 Oct 2026	$1.66M
23 Oct 2026	$1.63M

Date	Active loans
12 Oct 2026	$608K
13 Oct 2026	$605K
14 Oct 2026	$598K
15 Oct 2026	$600K
16 Oct 2026	$563K
17 Oct 2026	$526K
18 Oct 2026	$534K
19 Oct 2026	$531K
20 Oct 2026	$534K
21 Oct 2026	$530K
22 Oct 2026	$504K
23 Oct 2026	$491K

Get every chart in the full report →

Method and Data Boundary

Castle compares protocol design, liquidity formation, maturity handling and exit mechanics across incumbent and purpose-built fixed-rate markets. The analysis combines interviews with Morpho, Tenor Finance, Term Labs and IRIS Credit with protocol documentation and lending balances from DeFiLlama around publication.

Published: August 2026
Data snapshot: August 2026

Primary Evidence

Data From the Report

Fixed-rate lending by protocol, end of August 2026

Protocol	Type	Active loans
Fira	Purpose-built, Pendle-style	$430M (mostly the UZR market)
Loopscale	Purpose-built credit order book	$55M
Liquity V2	Borrower-set rate CDP	$32M of BOLD in circulation
TermMax	Purpose-built, zero-coupon tokens	$30M
Term Labs	Purpose-built auction	$3.7M
Morpho Midnight	Incumbent, intent-based	$2M
Flex	Borrower-set rate money market	About $900K
KPK vault on Euler	Curator-built	About $700K in deposits
Jupiter Offerbook	Incumbent, intent-based	$450K
Kamino Fixed Rate Lending	Incumbent, rate and duration grid	Whitepaper
IRIS Credit	Solver-based origination layer	Pre-launch

Source: DefiLlama data in Castle Labs, Fixed-Rate Lending (August 2026). All variable and fixed DeFi lending: $28.5B in active loans.

Questions This Report Answers

What is fixed-rate lending in DeFi?: A loan where the interest rate, and usually the maturity, is set at the start, so the lender knows the yield and the borrower knows the cost. Most DeFi lending uses variable rates that move with pool utilisation. Of the $28.5 billion in active DeFi loans at the time of the report, almost all was variable-rate.
Why has fixed-rate lending been hard to build onchain?: Three problems held back earlier versions. Liquidity splits across maturities, rates and collateral, so each market is thin. Lenders cannot exit before maturity unless someone buys their position. And capital sits idle while it waits for a match. Newer designs answer with multi-market offers, tradable positions and capital that keeps earning variable yield until a loan is matched.
How does Morpho Midnight work?: Midnight, launched by Morpho in July 2026, is intent-based zero-coupon lending. Lenders and borrowers post offers that do not lock capital, and capital only moves when a match settles. Positions are credit units and debt units that can be traded, so lenders can exit early by selling credit units and borrowers can buy debt units back. It reached $2 million in active loans by the end of August.
What is Tenor Finance?: An access layer built on Morpho Midnight, which DeFi Frontier calls the HIP-3 of Midnight. It adds auto-renewal through independent keepers, a fallback to Morpho Blue's variable rate when no fixed match exists, onchain OTC quotes with whitelisted counterparties, and organisation accounts that can run KYC-gated credit markets.
How does Jupiter Offerbook avoid liquidations?: Loans run for fixed terms, usually 1 to 30 days, and there is no price-based liquidation. If the borrower does not repay at maturity, the lender claims the collateral. That lets lenders accept long-tail collateral such as NFTs or RWAs with no active price discovery, as long as they are willing to underwrite it. Offerbook had $450,000 in active loans.
How do TermMax and Fira compare to Pendle?: Both split a loan into a fixed claim and a floating piece, as Pendle does. TermMax's Fixed Rate Token (FT) redeems for one unit of the loan asset at maturity and trades at a discount before then, like Pendle's PT. Fira's Bond Token (BT) works the same way, and its Coupon Token (CT) carries the floating yield, like YT. Fira had $430 million in active loans, almost all in its Usual Zero Rate market; TermMax had $30 million.
What risks remain with fixed-rate loans?: Fixed rates make the cost of debt explicit but do not remove collateral, default, redemption, solver, LP or refinancing risk. In Liquity V2 and Flex, borrowers who pick a low rate are first in line to be redeemed. If rates run far enough past an IRIS Credit solver's quote, the solver's bond runs out and the borrower pays the floating rate. Term Labs was hit by an $8.5 million governance exploit in its Meta vaults.

More on this topic: DeFi & Onchain Finance

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