[bko]

You earn interest by "lending" your digital asset. People want to speculate against the asset (i.e. bet the price will go down). The only way to do that is borrow someone else's crypto (pay them an interest rate for the trouble), sell it, and eventually buy it back later at a lower price.

The interest rate is determined by the market, and since its pretty early on in defi world, the owners of the crypto demand a higher interest rate to make it worth their while. Also, the more volatile the asset the more valuable it is in terms of derivatives.