Recently, Wall Street has been buzzing with a bold prediction: the Federal Reserve might cut interest rates by 100 basis points next week, or even start a negative interest rate era like Japan. Sounds exciting, right? Saving money loses, borrowing money gains, the entire financial world seems to be turning upside down. Many people on social media are already planning: mortgage their houses, borrow lisUSD in DeFi protocols to leverage, and wait for the moment when interest rates turn negative.

But there is a fatal misconception here.

Assuming we really enter a rate-cutting cycle, don’t be naive enough to think that on-chain lending costs will decrease linearly. Take Lista DAO as an example; it doesn’t use simple fixed interest rates or mechanisms tied directly to the Federal Reserve, but a set of adaptive dynamic models. What is the key to this model? **Real-time supply and demand**.

The protocol’s goal is to keep borrowing costs below 2%, which sounds good. But the problem is, when everyone is chasing the same dream, the market can become overly crowded. Imagine this scenario: as soon as the rate cut news comes out, the market gets hyped, everyone rushes in to mortgage BNB and borrow lisUSD to leverage. The utilization rate of the liquidity pool skyrockets, and the algorithm acts like a ruthless gatekeeper, immediately raising interest rates according to a preset curve to suppress demand. The 1% interest rate you see could jump overnight to 10% or even higher.

This is the on-chain "interest rate penalty" mechanism. Macro policy changes do not necessarily mean on-chain liquidity changes. In fact, when market sentiment is at its most euphoric, it’s often the time when costs are highest and risks are greatest.

My operational logic is simple: **perform stress testing first**. Before clicking any borrow or lend button, I ask myself one question—if the cost of funds stays above 10% for a month, can my position still be profitable? If I can’t figure out the answer, I don’t touch it. No matter how bullish the macro narrative is, it won’t change this fact.

Ultimately, the real "central bank" in the DeFi world isn’t Powell, but smart contracts. Code never shows mercy; it only executes logic.