Seeing some lending protocols offer interest rates of 5% or even lower, many people's first reaction is: this is an arbitrage opportunity! But then, calmly thinking about it: how is such a low rate achieved? Where did the risk go?

Traditional finance or early DeFi lending works like this — all depositors put their money into a big pool, sharing the default risk of all borrowers collectively. Although this model is simple and easy to understand, to cover the risk of collective bad debt, the interest rates can't be very low.

However, some new-generation lending protocols use a different approach: a Vault-based risk isolation architecture. How to understand this? Simply put, it's "one collateral, one dedicated lending market." For example, a BTCB collateralized lending pool, a PT-clisBNB collateralized lending pool, and so on. These pools are independent of each other. What's the benefit of this? — If a niche liquidity re-mortgage token (LRT) market suddenly surges or experiences a chain liquidation, that risk is confined within that specific pool and won't spread to mainstream assets like BTCB or ETH.

This "risk isolation" design is the real secret behind low interest rates. Because risks are precisely defined and segmented, protocols and participants can more accurately price the risk of each specific asset, avoiding overpaying for unrelated risks.

From another perspective — borrowers get lower financing costs; depositors providing liquidity to specific pools have clearer returns that correspond to the particular risks they are willing to bear, rather than being caught in a "mixed bag" of average risks.

Therefore, when discussing such lending strategies, don't just focus on the "5% borrow, 20% profit" interest spread. More importantly, understand that the interest rate and liquidation conditions of the lending pool you participate in are jointly determined by the type of collateral (like BTCB) and its inherent risk characteristics.

Low interest rates are not a gift from the sky; they are the result of clever mechanism design that reorganizes and arranges risk. Before entering, make sure you understand — which "risk unit" you are participating in. This is extremely important.