DeFi Default Debt Rises 39.6% as Borrowers Leverage Assets for Tax Deferral

A working paper by researchers from the University of Texas at Austin, the National University of Singapore, and others highlights the link between tax-motivated borrowing and credit risk in DeFi. The study indicates that using crypto assets as collateral to avoid selling and triggering tax events has led to a 39.6% increase in default debt within DeFi protocols.