The era of easy money in crypto is over as DeFi yields are failing to compete with a simple savings account

Decentralized finance (DeFi) is no longer offering the lucrative yields it once did, with rates now falling below those of traditional financial institutions like Interactive Brokers. Protocols that once offered yields of 20% or more are now providing significantly less, such as Aave's 2.61% APY on USDC deposits, which is lower than Interactive Brokers' 3.14%. This shift undermines a core tenet of DeFi: higher returns for higher risk. Factors contributing to this decline include the unwinding of token incentives, reduced borrowing demand due to low crypto sentiment, and a rise in exploits and security failures. While some specialized DeFi products and curated vaults offer higher yields, they often come with different risk profiles or are tied to off-chain assets. Furthermore, potential regulatory changes, like the Digital Asset Market Clarity Act, could further restrict passive stablecoin yields. Consequently, the risk-reward proposition that attracted investors to DeFi is becoming increasingly difficult to justify.

(Source：CoinDesk)