Original author: @BlazingKevin_, Blockbooster researcher

1. Crypto has no "benchmark interest rate"

The leverage and financing in the crypto world—trillions of dollars in leveraged positions, collateralized lending, yield products—are built on a lack of a unified benchmark interest rate curve.

According to BitMEX's Q1 2026 derivatives report, the new track of "traditional asset perpetuals" saw its weekly trading volume soar from about $525.8 million at the end of 2025 to $30.7 billion in mid-March 2026, a quarterly increase of around 5,756%; its monthly trading volume jumped from $7.9 billion in November 2025 to $199.1 billion in March 2026, growing about 25 times in five months.

According to Hyperliquid's 30-day snapshot from DefiLlama, it processed approximately $172.63 billion in perpetual trades, with open contracts worth about $9.13 billion. In Q1 2026, commodity perpetuals accounted for about 30% of Hyperliquid's open contracts, driven mainly by demand for 24/7 oil trading.

"Traditional asset perpetuals." Binance launched TradFi perpetual contracts on January 8, 2026, starting with gold (XAUUSDT) and silver (XAGUSDT). Binance secured approximately 62.7% of the TradFi perpetual market share by being first to market, followed by Hyperliquid with 29.7%.

Data for these traditional asset perpetuals on Hyperliquid comes from a partnership with S&P Global, and this collaboration (which directly links crypto perpetuals to traditional indices) is drawing regulatory scrutiny from the U.S. CFTC.

Meanwhile, Ethena's USDe market cap was around $4.5 billion to $5.9 billion in early June 2026.

Each of these products reports an "interest rate" or "yield"—perpetuals have funding rates, lending protocols have lending APRs, sUSDe has staking yields, and tokenized government bonds have coupon rates—but crypto still does not have its own SOFR. There is no widely accepted benchmark curve that can be used as a pricing anchor. Each exchange and protocol is turning into a tiny financing market, quoting its own prices, yet without a public, credible reference system between them.

2. What counts as a Crypto "benchmark interest rate"?

Let’s first look at three groups of different interest rates for comparison:

• First group: benchmark financing rate vs product yield vs implied rate of derivatives. **The APY of sUSDe is a type of product yield—it is the return for holders; the perpetual funding rate is an implied rate of derivatives—it is the fee paid by both long and short parties to maintain the perpetual price pegged to the spot;** while a benchmark financing rate should be a public reference that countless other products can refer to for pricing. **Product yields and implied rates of derivatives are not benchmarks—they are "downstream" of the benchmark, resulting from a variety of premiums and structures layered on top of the benchmark.**
• Second group: overnight rates vs term rates. **The perpetual funding rate settles hourly or every eight hours, which is essentially an overnight rate—it only reflects the funding cost from "this moment to the next settlement point," without term structure. It cannot tell you the price difference between "borrowing for 30 days" and "borrowing for 90 days." This is similar to SOFR itself being an overnight rate that must rely on the futures market to create a Term SOFR with term structure. An interest rate without term structure cannot support any medium to long-term fixed income market.**
• Third group: real borrowing rate vs algorithmic/implied rates. Real bilateral lending transactions (e.g., Bitfinex's collateral financing market, which matches real lenders with real borrowers) and algorithmic utilization pricing (e.g., Aave, where rates are automatically calculated based on pool utilization via a formula) are fundamentally different pricing generation mechanisms. The former is the price determined by market participants using real money, while the latter is a curve written into code by protocol designers.

From this distinction, we can derive the standards that "a qualified benchmark" should meet:

Based on real transactions,the underlying market is wide enough and deep enough (difficult to be manipulated by a single participant),governance is independent (no conflicts of interest between the managers and the market being priced),preferably has term structure (to support medium to long-term pricing).

(The underlying of SOFR is real transactions in collateralized overnight repos using U.S. Treasuries, with average daily transaction volumes "often exceeding $1 trillion." This is the real transaction volume of overnight repos. It is entirely different from the nominal volume supporting Term SOFR.)

Using the logic of SOFR to view crypto reveals structural isomorphism. The Bank for International Settlements has likened on-chain collateral lending markets to the "crypto-native money markets," which operate in a manner similar to traditional tri-party repos—over-collateralized, marked to market, and rolled over overnight. Since on-chain lending is structurally a repo-style secured financing, judging the crypto benchmark using SOFR (a benchmark based on real transactions in repos) is an appropriate isomorphic reference.

3. What are the features of SOFR? Why is LIBOR being phased out?

LIBOR (London Interbank Offered Rate) was the cornerstone of global finance. At its peak, approximately $300 trillion in financial contracts (including interest rate swaps, mortgages, student loans, corporate bonds, etc.) relied on LIBOR across five currency zones. However, LIBOR had a fatal design flaw: it was not based on real transactions but rather the borrowing costs estimated by a small number of quoting banks each day.

This flaw was explosively revealed after the 2008 financial crisis. Regulatory investigations found that several large global banks' traders systematically manipulated LIBOR quotes to benefit their own derivatives positions.

The manipulation scandal directly led to the abolishment of LIBOR.

Replacing it is SOFR (Secured Overnight Financing Rate). The design of SOFR is almost a "reverse engineering" for each of LIBOR's flaws: it does not use self-reported estimates but is based on real transactions in the overnight repo market backed by U.S. Treasuries; it takes the volume-weighted median of trades from three repo markets (tri-party repos, GCF repos, and bilateral repos cleared through FICC's DVP service), making it wide in scope, deep in liquidity, and difficult to manipulate by a single participant; it is managed by the New York Fed, follows IOSCO benchmark principles, and has no conflicts of interest بين the managers and the market being priced.

However, SOFR has a "built-in deficiency": it is an overnight rate and lacks term structure. The market needs not just "today's overnight cost" but also "anticipated funding costs for the next three months" to price medium to long-term loans. Thus, the CME has launched CME Term SOFR—a set of forward rates covering tenors of 1 month, 3 months, 6 months, and 12 months.

It infers market expectations of future SOFR paths through trading data from SOFR futures, thereby "forming" a forward term curve. (The representative nominal volume of SOFR futures used to construct Term SOFR is about $2.3 trillion daily in Q4 2023.)

4. Some candidate interest rates that can be discussed

There are many candidates in the market that are seen as "interest rates" or "yields," which we will break down one by one. We will also discuss why certain rates are clearly not suitable as benchmark rates and which may have room for evolution.

A common axis throughout all of this breakdown is—"who has the authority to decide": is it market weighted, algorithmic utilization, or governance set?

4.1 Perpetual Funding Rate (Hyperliquid / Binance)

The perpetual funding rate is the implicit price of leverage, driven by the basis between spot and perpetual: it is essentially an overnight rate, with no term structure.

When the spot markets for TradFi assets are closed (like weekends for stocks and precious metals), exchanges cannot obtain real spot prices to calculate funding rates. Binance's approach is to freeze the index price at the last spot price and use an EWMA mark price with a ±3% cap; Hyperliquid also switches to EWMA on weekends and sets volatility caps by asset. During the closed-market period, the "anchor" for perpetual prices is actually a predictive value, not the real transaction price. When the market reopens and the real price gaps above this cap, limit-up/limit-down can occur. Therefore, the price during the closed-market period is predictive rather than a real arbitrage anchor.

On May 29, 2026, the U.S. CFTC approved KalshiEX's Bitcoin perpetual contract (BTCPERP), marking the first truly perpetual and regulated Bitcoin perpetual in the U.S. They also released a policy statement on perpetual contracts, guidance for 24/7 trading and clearing, and a no-action position regarding Coinbase providing perps via Deribit. The significance is that a regulated, centrally cleared perpetual means its funding rate and basis are generated in a compliant and cleared environment—this just might be a candidate for "crypto SOFR" in the future. This, along with the previous Hyperliquid–S&P Global index partnership under CFTC scrutiny, signals that "regulation is approaching crypto benchmarks."

4.2 Bitfinex Margin Financing + FRR

This is the native USD term financing market in crypto.

The mechanism is as follows: Bitfinex operates a peer-to-peer margin financing market where lenders lend money to margin traders for interest. The key design is that the financing term is between 2 to 120 days (commonly 2 days, 7 days, and 30 days), and the rate and term must match during matchmaking. This means that Bitfinex's financing market naturally constitutes a real borrowing curve: borrowing for 30 days and 120 days carries different prices, matched by real supply and demand. This is one of the very few true lending markets in the crypto world that has a natural term structure.

And FRR (Flash Return Rate) is the reference rate for this market: FRR is the average rate calculated based on all active fixed-rate financing, weighted by their scale, and updated every hour. Essentially, it is the "Bitfinex version of a benchmark reference rate"—an index reflecting the current average borrowing cost in the market. Lenders can choose to lend at FRR directly, thereby letting their rates automatically follow the market.

Bitfinex charges about 15% on lending profits (with hidden orders at 18%); the minimum order amount is $150. FRR is quoted as daily interest rates, annualized from the daily rates: Bitfinex USD's FRR is about 0.0136%/day, annualized around 5.1%—comparable to tokenized government bonds, Aave, SSR, and others.

The crux lies in its volatility: the historical range for USD borrowing has fluctuated sharply between approximately 3%–20% APR and is strongly correlated with leverage demand.

This daily interest rate curve unfolds over different terms from 2 to 120 days, forming a native USD financing curve in crypto that exhibits real term structure.

Bitfinex and Tether belong to the same parent company, iFinex, and the management overlaps. This gives Bitfinex the most abundant USDT liquidity in the entire crypto world—one reason its financing market is so deep; but at the same time, it also concentrates counterparty risk and stablecoin issuer risk within the same composite structure. Borrowing money from Bitfinex, using Bitfinex's matchmaking, priced in Tether, with the same parent company providing a backstop in extreme situations—this is a highly self-contained structure.

Although Bitfinex's financing market is the oldest and deepest native USD term financing market in crypto, its absolute scale (the outstanding amount of the financing market and daily matchmaking volume) is still much smaller than the trillions of dollars in trading volume of the previously mentioned perpetual markets.

Comparing FRR with LIBOR and SOFR on the dimension of "whether it is based on real transactions," FRR is actually cleaner than LIBOR, as it is derived from real, executed fixed-rate financing weighted by their scale, reflecting true market behavior. However, FRR comes from a single exchange's order book (concentration), operated by the same parent company, iFinex, that also controls the largest stablecoin, Tether (conflict of interest), and this operator is also the last lender (further concentration and conflict). Thus, FRR hits on the very areas of concentration and conflict of interest that SOFR aimed to eradicate.

4.3 DeFi Lending Rates (Aave / Morpho)

This is a representative of algorithmic utilization pricing: the interest rates are not determined by bilateral matchmaking but are automatically calculated based on the utilization rate of the liquidity pool through a preset formula—the higher the utilization rate, the higher the interest rate. It fluctuates in real-time with borrowing demands.

The deposit rate for USDC on Aave's mainnet fluctuates between approximately 3.5%–6% based on utilization; the USDC vault managed by curators on Morpho is around 5%–7% after deducting curators' fees.

4.4 MakerDAO / Sky Savings Rate (DAI's DSR / USDS's SSR)

This is the "policy-like rate" directly set by the protocol governance. DAI's DSR (Dai Savings Rate) and USDS's SSR (Sky Savings Rate) are widely cited and function analogously to a policy rate set by a central bank—they are not triggered by market matchmaking nor algorithmic utilization but determined by governance votes from Sky.

The governance setting of DSR/SSR, the market weighting of FRR, and the algorithmic utilization of Aave constitute a contrast of three fundamentally different interest rate generation mechanisms.

Governance setting vs. market weighting vs. algorithmic utilization—these three mechanisms each have their credibility issues and manipulation risks, whereas a benchmark in a mature market should originate from the one that is the hardest to manipulate (real transactions that are market-weighted and sufficiently wide and deep). Currently, the figures show that SSR was reduced from 4.75% by governance at the end of April 2026 to around 3.6%–3.75% by early June (the "governance setting" mechanism moved along the Fed's path); the circulating volume of USDS is about $11 billion.

4.5 Tokenized Government Bond Yields (BUIDL / BENJI, etc.)

This is a "risk-free leg" of about 4–5%, qualifying it as a candidate for "crypto risk-free benchmark." BlackRock's BUIDL, Franklin Templeton's BENJI, etc., have brought the coupon yields of U.S. Treasuries on-chain. Currently, major tokenized government bond tokens (BUIDL, USDY, USDM, USYC, etc.) offer around 4.1%–4.7% APY as of April 2026, closely tracking the yields of 3-month U.S. Treasuries. Its yield can almost directly align with traditional risk-free interest rates.

The secondary market pricing of this "risk-free leg" itself is very tight—taking Ondo's tokenized government bonds as an example, between February and April 2026, their transaction prices deviated from the median by only about 2 basis points, with 95% of transactions falling within 5 basis points. This indicates that when the underlying assets are sufficiently standardized and risk-free, on-chain price discovery can be very accurate; in contrast, the "prices" of high-risk varieties like perpetuals during closed-market periods are filled with predictive elements—lower the risk, the more real the price; higher the risk, the more pricing resembles guessing.

4.6 Ethena sUSDe

This is a securitized product combining perpetual funding rates and collateral yields. Its APY highly depends on the level of funding rates in the perpetual market; thus, it is essentially a repackaging of implied rates, rather than a benchmark itself.

Putting these seven candidates together: they each measure different things (leverage sentiment, real lending, algorithmic utilization, governance policies, risk-free coupon, institution arbitrage) and carry different risks (liquidation, counterparty, smart contract, governance, credit), priced by different entities.

No single one meets the three criteria of "wide scope + term structure + governance independence."

This reflects the current state of crypto benchmark interest rates: there is not a single one that can serve as an anchor independently.

5. Discussion on Building a Spread Map:

Arranging the above candidate interest rates side by side at similar or comparable maturities, here is a value snapshot with deadlines:

Candidate Rates Approximate Levels (early June 2026) Spread Relative to Government Bonds Spread Attribution Tokenized Government Bonds (BUIDL, etc.) ~4.1%–4.7% Benchmark (≈0) Risk-free leg itself SOFR (overnight, contrast anchor) ~3.61% — TradFi risk-free overnight Sky SSR (USDS Savings) ~3.6%–3.75% ~ −1% to −0.4% Governance setting + protocol credit premium Aave USDC Deposit ~3.5%–6% (fluctuating with utilization) ~ −0.6% to +1.9% Smart contract + utilization premium Ethena sUSDe historical 4%–17% (volatile) Highly variable Funding rate + collateral yield, premium fluctuates wildly with market sentiment Perpetual Funding Rate Near neutral (currently low) Close to 0 or even negative Leverage/short volatility premium, direction reverses with long/short sentiment CME Basis (cash-and-carry) Fluctuates with term and sentiment Usually positive "clean" institutional financing premium Bitfinex FRR ~5.1% annualized (~0.0136%/day, early June; historical range 3%–20%) Currently very thin, soars under pressure Venue + Tether counterparty premium

Writing the logic of this table in attribution form:

• Perpetual Funding Rate − Government Bond Yield ≈ Leverage/short volatility premium
• Bitfinex FRR − Government Bond Yield ≈ Venue risk premium + Tether counterparty premium
• Aave Lending Rate − Government Bond Yield ≈ Smart contract risk premium
• DSR/SSR − Government Bond Yield ≈ Governance setting and protocol credit premium
• CME Basis − Government Bond Yield ≈ "Clean" institutional financing premium

Looking at Bitfinex's FRR. Currently, it is approximately 5% annualized, nearly aligned with tokenized government bonds (~4.5%), Aave (~4–5.5%), and SSR (~3.6%)—the spread is very thin. FRR may seem insignificant, almost on par with other candidates. But the danger of FRR lies not in its "wild fluctuations." The historical range for USD borrowing rates fluctuates sharply between 3%–20% APR: during calm periods like now, it converges near risk-free rates; however, once we enter high leverage, high demand, or market pressure periods, it can surge rapidly.

Using such a rate as an anchor for pricing the entire market means the anchor itself will swing wildly at the moments when stability is most needed.

In traditional finance, if two instruments reflect the same risks but provide different rates, arbitrageurs would quickly step in to compress the spread. However, in crypto, the spread is seen as structural risk priced by the market.

The working paper from the Bank for International Settlements (BIS) points out that the carry scale in crypto can become extremely large—sometimes exceeding 40%/year, fluctuating dramatically over time; in times of stress, it can reverse sharply—during the FTX collapse, the CME carry briefly fell below -50%. Crypto presents negative convenience yields (investors prefer holding futures rather than spot), which is exactly the opposite of commodity markets—though it is similar to certain government bond market dynamics (balance sheet constraints make derivatives more appealing than holding spot). In other words, the reason crypto carry is large and not arbitraged away is that regulated capital struggles to hold spot, only participating through futures, and arbitrage capital is scarce due to margin and clearing risks.

Conclusion

Based on regulatory trends and capital flows. The combinations that may emerge in the future are: tokenized government bonds as the base of the risk-free leg + a term curve stitched together from CME basis / Bitfinex term structure / on-chain interest rate swaps—or a governance-neutral aggregate index.

The logic of the former is that the risk-free leg should naturally be anchored by the assets closest to risk-free, while the term curve needs to be pieced together from existing sources that have term structure; the logic of the latter is that rather than relying on any single source, it is better to create a neutral index aggregated from multiple sources, thereby avoiding concentration by design.

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