Infinity's lending protocol is built on the assumption that there is an almost infinite amount of proceeds (tokens) available to both lend, or borrow, and that each participant is motivated to go into or out of the system at some level of interest rates. This model, where each participant has their own preferences, creates the interest rate market so that at every point, no matter what interest rates are there is someone looking to lend or borrow.
In reality, however, this may not always be the case. This 'unlimited' supply and demand for tokens may not be integrated with or aware of Infinity, or specifically, may not have limit orders in place with Infinity. As such, while there may be unlimited proceeds globally, there may also indeed be zero proceeds locally, within Infinity, to either lend or borrow.
To mitigate against this risk, we have enlisted the support of Liquidity Providers. These participants will lend or borrow on-demand, effectively making markets in exchange for a share of the protocol's fees.
The broader interest rate markets across DeFi are still in their infancy with few options other than to lend or borrow within an 'instantaneous' or on-demand context. There is no concept (yet) of term lending or borrowing, or more broadly, a yield curve. There is also no concept (yet) of seamless credit risk transfer.
As we see more lending and borrowing opportunities across different maturities, as well as more participants in the credit markets, we expect participants' sensitivity to each maturity date to increase, thus further enhancing liquidity at each point along the yield curve.
We hope to update this section with more statistics as our protocol, and its usage, evolve.