Interest-rate swaps are foundational to the financial markets. Banks are central to originating them and trading them. When a borrower raises floating rate debt from a lender and wants to fix its liability cost, it finds another contracted counterparty, usually a bank, that pays floating and receives fixed while the borrower takes the opposite side, right?
Well, perhaps not for much longer.
In November, a new decentralized finance (DeFi) protocol, Pairwyse, emerged that enables investors to obtain term fixed rates from overnight DeFi borrowing and lending protocols that have up to now offered only floating rates.
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