Plain English
An on-chain money market is a lending protocol where deposits earn variable interest and borrows pay variable interest, with rates updated each block based on utilization. Aave, Compound, and Morpho are the dominant examples. Rates change in real time; there are no maturities.
How it actually works
Lenders deposit into a pool; borrowers post collateral and draw from the same pool. Utilization (borrowed/supplied) drives the rate — high utilization → high rates → attracts more lenders, deters more borrowers, until equilibrium. Interest accrues per block. Withdrawals are available as long as utilization < 100%.
What it means for you
On-chain money markets are the on-ramp for serious DeFi yield and credit. Stablecoin lending typically yields 4–10% in normal markets, much higher during spikes. For HNW, splitting cash between tokenized T-bills (defined rate) and Aave/Morpho lending (variable rate) is a clean cash strategy. The variable side captures upside; the fixed side anchors expected return.
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Educational content only. Not investment, tax, or legal advice.