# Why Bloom? ## What problem does Bloom solve? Yields in major DeFi money markets have troughed and are struggling to keep up with the traditional debt markets. Compare this with treasury bill rates, and consider the necessary risk premium for smart contracts and pooled token exposure, and it's no surprise lending TVL onchain has decreased considerably. The "risk-free" rate is typically defined as the interest rate the U.S. federal government is willing to pay lenders. Because they are often considered the lowest-risk borrower in the market, the rest of the debt market naturally must pay a higher rate to reflect their entity's respective risk premium. However, in DeFi, major money markets price rates are based solely on utilization. Utilization curves are non-reactive to external variables like the federal funds rate, at least directly. Of course, money may flow out of them towards the risk-free rate, which would affect utilization. The problem with these utilization-based curves is that to create a reasonable lend/borrow spread, yields can rarely exceed 3-4% for most stablecoins. The second, and more important, problem, is that RWAs do not yet exist onchain in a meaningful and integrated capacity. The RWAs that do exist onchain require full KYC procedures, and once issued, are relegated to a siloed ecosystem of unused DeFi products that completely kneecap the utility of an asset being onchain. It is our strongly held opinion that nearly all of the value of DeFi comes from boundless composability. Composability is the feature that unlocks hyper-scalability, democratized access, and ultimately unlocks the power of DeFi. Bloom is the first step to DeFi's superiority and the beginning of the end of the old ways. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.bloom.garden/bloom-basics/why-bloom.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.