Original Title: DeFi Has Lost Its Charm
Original Author: @0xPrince
Original Compilation: Peggy, BlockBeats
Editor's Note: DeFi has not stagnated, nor has it collapsed, but it is losing something that was once most important—the 'sense of exploration'.
This article reviews the evolution of DeFi from its early exploratory stages to gradual maturation, pointing out that as infrastructure has improved and transaction models have solidified, the ways of participating in on-chain finance are converging: yield has become a basic expectation, lending resembles short-term financing more than credit, and incentives dominate user behavior. The author does not deny the value of DeFi but raises a more difficult question: after efficiency and scale have been sufficiently optimized, can DeFi still shape new behaviors, rather than merely serving the same small group of existing users?
Below is the original text:
TL;DR
The way people use DeFi is becoming highly convergent. The market and infrastructure have matured, but curiosity has been replaced by caution; yield has shifted from 'returns users actively take risks to earn' to 'compensation waiting to be paid', and participation is increasingly centered around incentives.
The allure of DeFi is slowly fading. I'm not being dramatic. It hasn't stopped functioning, nor has it stopped evolving. What has truly changed is that you rarely feel like you're stepping into something genuinely new anymore.
I entered this industry in 2017 (the ICO era). Everything back then felt rough, unfinished, even a bit out of control. Chaotic, but open. You felt the rules were temporary, and the next 'primitive' could completely reshape the entire ecosystem.
DeFi Summer was the first time this belief became concrete. You weren't just trading tokens; you were watching market structures form in real-time. New primitives weren't just upgrades; they forced you to rethink 'what is possible'. Even when systems failed, it still felt like exploration because everything was still in the process of being created.
Today, much of DeFi seems to just repeating the same script with cleaner execution. The infrastructure is more mature, the interfaces are better, and the models are already understood. It still works, but it no longer frequently opens new frontiers. This has changed people's relationship with it.
People are still building, but the behavioral patterns reinforced by DeFi have shifted.
The Form Optimized by DeFi
DeFi became highly speculative because trading was the first need to be moved on-chain at scale.
In the early days, traders were the first true 'power users'. As they flooded in, the system naturally began to adapt to their needs.
Traders value: optionality, speed, leverage, and the ability to exit at any time. They dislike being locked in, dislike risks dependent on others' discretion. Protocols that aligned with these instincts grew rapidly; those that required users to behave differently, even if functional, often needed 'subsidies' to compensate for this mismatch.
Over time, this shaped the psychological expectations of the entire ecosystem: participation itself began to be seen as an 'action that deserves compensation', rather than because the product was useful under normal circumstances.
Once this expectation formed, people didn't 'step out'; they just became more proficient: rotating faster, holding stablecoins longer, only appearing when trading conditions were clearly favorable. This is not a moral judgment but a rational response to the environment DeFi created.
Lending Became Financing, Not Credit
Lending most clearly illustrates the gap between DeFi's narrative and its actual path to scale.
In the traditional understanding, lending implies credit, credit implies time—it means someone is borrowing for a real need, and someone is willing to bear the uncertainty over that period.
But what has truly scaled in DeFi is more like short-term financing. The primary borrowers aren't borrowing for 'duration', but for positions: leverage, recycling, basis trading, arbitrage, or directional exposure. People borrow money not to hold a loan.
Lenders have adapted to this reality. They no longer act like credit underwriters, but more like liquidity providers: valuing exit, hoping for redemption at par, preferring sustainably repriced terms. When both sides act this way, the market behaves more like a money market than a credit market.
Once the system grows around these preferences, building genuine credit structures on top becomes extremely difficult. You can add features, but you can't forcibly change motivations.
Yield Became a 'Basic Expectation'
Over time, yield ceased to be just a return and became a justification for participation.
On-chain risks include not only price volatility but also contract risk, governance risk, oracle risk, cross-chain risk, and the uncertainty that 'something you didn't think of will go wrong'. Users gradually learned: bearing these risks deserves explicit compensation.
This is reasonable in itself, but it changed behavior.
Capital doesn't slowly return from high yields to normal yields and continue participating; it simply leaves. Users maintain liquidity, waiting for the next moment to 'be rewarded for participation again'.
The result is: high activity but lacking continuity. Activity surges when incentives are active and rapidly subsides after they end. What looks like adoption is often just 'rented behavior'.
When participation only occurs during incentive windows, anything meant to last long-term becomes difficult to build.
The Trust Problem
Another thing that has彻底 changed the ecosystem is trust.
Years of exploits, rug pulls, and governance failures have reshaped user psychology. Novelty no longer sparks curiosity but triggers vigilance. Even sophisticated users enter later, with smaller positions, preferring systems that have 'survived' over those that are 'theoretically better'.
This might be healthy, but the culture changed: exploration turned into due diligence, the frontier turned into a checklist. The space became more serious, and seriousness does not equal charm.
More difficultly: DeFi trains users to demand high compensation for risk while making them less willing to take new risks. This compresses the middle ground where past experiments thrived.
Why Both Sides Are 'Right'
This is where DeFi debates often misalign.
If you dislike DeFi, you're not wrong—it does seem closed and self-referential, many products serve the same small group, and historical growth relied heavily on incentives.
If you still believe in DeFi, you're not wrong either—permissionless access, global liquidity, composability, and open markets are still powerful ideas.
The mistake is pretending these were ever the same goal.
DeFi didn't fail; it successfully optimized for a narrow set of intents. It is this very success that makes it harder to expand into new behavioral patterns.
Whether you see this as progress or stagnation depends entirely on what you initially expected DeFi to become.
How Charm Can Return
DeFi won't regain its charm by recreating DeFi Summer. Frontier moments don't repeat.
What has faded is not innovation, but the feeling that 'behavior is still being changed'. When a system stops reshaping how people use it, leaving only execution efficiency, the sense of exploration disappears.
If DeFi wants to become important again, it must do the harder thing: build structures that make different types of behavior rational.
Make capital willing to stay sometimes; make duration an understandable, exitable choice, not a burden to be endured; make yield more than just a headline number, but a decision that can be truly underwritten.
That kind of DeFi would be quieter, grow slower, and wouldn't dominate timelines like past cycles—but that usually means usage is driven by real demand, not constant incentives.
I'm not even sure if such a transformation is possible without disrupting the systems people still rely on. That is the real constraint.
DeFi cannot expand the boundaries of behavior without changing 'for whom participation makes sense'.
A system that continuously rewards speed, optionality, and quick exit will continuously attract users optimizing for those traits.
The path is actually quite clear:
If DeFi continues to reward the behavior it has already optimized for, it will remain highly liquid but permanently niche;
If it is willing to pay the price to shape a different type of user, then charm will return not in the form of hype, but in the form of gravity—a silent force that keeps capital around even when nothing is happening.
