This article is from:Avon Co-founder Prince
Compiled by | Odaily Planet Daily (@OdailyChina); Translator | Azuma (@azuma_eth)
TL;DR
The way people use DeFi has become highly homogenized. The market and infrastructure are maturing, but user psychology has shifted from curiosity to caution. The yield mechanism has evolved from "users bearing risks and rewards themselves" to "users passively waiting to be rewarded," and participation has gradually converged around incentives.
The Fading Luster of DeFi
DeFi is losing its sparkle, and I'm not joking. It hasn't stopped functioning or evolving. What has changed is that you rarely get the feeling of "engaging with something entirely new" anymore.
I entered this market in 2017 (the ICO era). Back then, everything seemed unfinished, even somewhat out of control. The environment was chaotic, yet open. You could still believe that all market perceptions were temporary, and the next foundational innovation could reshape the entire ecosystem.
DeFi Summer was the moment this belief first became tangible. You weren't just trading tokens; you were witnessing the real-time formation of a new market structure. It wasn't a simple upgrade; it forced you to rethink "what is possible." Even when the system had problems, it felt like exploration because the entire ecosystem was still growing.
Today, much of DeFi feels like repeating the same script with cleaner execution. The infrastructure is more mature, the interfaces are more user-friendly, and the models are well understood by users. It still works, but it no longer frequently pioneers new frontiers, which has changed the relationship users have with it.
People are still building. What has truly changed is the user behavior patterns that DeFi "encourages."
The Evolution of User Behavior Patterns
DeFi became highly speculative because the first thing people wanted to do on-chain at scale was trade.
In the early days, traders were the first true heavy users. When they flooded in en masse, the system naturally adjusted to their needs.
Traders value options, speed, leverage, and easy exits. They dislike being locked in or relying on subjective judgment risks. Protocols that aligned with these intuitions grew rapidly; those that required users to change their behavior, while still operational, often had to pay users to tolerate this mismatch.
Over time, this shaped the psychological expectations of the entire ecosystem — user participation began to be seen as a behavior that required market compensation, rather than because the product was inherently useful under normal conditions.
Once this psychological expectation formed, it became difficult for people to shake it, and they increasingly took it for granted. Users rotate faster, hold stablecoins longer, and only act when opportunities are sufficiently obvious. This isn't a moral judgment but a rational response to the environment DeFi has created.
Lending Became "Financing," Not "Credit"
Lending is the clearest example of the difference between how DeFi is often portrayed and its actual scaled form.
On the surface, lending implies credit. Credit implies time, implies someone borrowing for reasons outside the market, and implies someone underwriting that time risk.
But the products that have truly scaled in DeFi are closer to short-term financing. The main borrowing groups aren't seeking duration; they're seeking positions — leverage, recursive loans, basis trading, arbitrage, directional exposure, etc. People borrow not to hold a loan long-term.
Lenders have adapted to this reality. They act more like liquidity providers than credit guarantors. They focus more on exits, prefer redemption at par, and favor terms that allow continuous repricing. When both sides act this way, market settlements resemble a money market more than a credit market.
Once a system grows around these preferences, building genuine credit structures on top becomes extremely difficult. You can add features, but you can't force a change in user motivation.
Yield Has Become a Baseline Expectation
Over time, yield has ceased to be just a return and started to become a justification for participation.
On-chain risk isn't just about asset volatility; it includes smart contract risk, governance risk, oracle risk, bridge risk, and the ever-present feeling that "things can go wrong in ways you haven't modeled." Users gradually realized that bearing these risks deserved visible compensation, an expectation that is itself reasonable.
But it changed user behavior. Capital doesn't gradually回落 (flow back) to normal yields and then stay; it leaves directly. Users keep capital highly liquid, waiting for the next opportunity to be rewarded for participation again.
The result is that project growth often has "high intensity but low continuity." Activity surges when incentives are on and cools rapidly when they're off. It looks like adoption, but it's essentially renting.
When participation only occurs during incentive windows, building anything meant to last long-term becomes difficult.
The Trust Problem
Another variable that changed everything is trust.
Years of exploits, rug pulls, and governance failures have altered user mentality. Novelty no longer sparks curiosity but triggers vigilance. Even seasoned users watch longer, deploy smaller positions, and prefer systems that "have lived long enough" over those that "look better."
This might be healthy, but it has changed market culture. Exploration became due diligence. The market has become more serious, and seriousness is clearly not synonymous with charm.
Compounding this, users are both accustomed to demanding high compensation for risk and increasingly unwilling to take on new risks. This squeezes the middle ground that once accommodated experimentation.
Why Both Sides Are "Partially Right"?
This is where DeFi debates often talk past each other.
If you dislike DeFi, you're not wrong. It sometimes seems self-referential, with many products serving the same small user base, and historical growth largely from incentives rather than stable demand.
If you believe in DeFi, you're not wrong either. Permissionless access, global liquidity, composability, and open markets remain powerful ideas.
The mistake is pretending these were ever the same goal. DeFi hasn't failed. It successfully optimized for a narrow set of behaviors, but this success makes it harder to expand to other behaviors.
Whether this is progress or stagnation depends entirely on what you expected DeFi to become.
How Charm Can Return
DeFi won't regain its charm by recreating DeFi Summer. History never repeats exactly.
What's truly missing isn't innovation itself, but the feeling that "behavior is still changing." Once a system stops reshaping how people use it and focuses only on execution, the sense of exploration vanishes.
If DeFi wants to shine again, it must do the harder thing: create structures that make different behaviors rational. Give capital a rational reason to stay; make duration something understandable and exit-able, not a reluctantly accepted burden; make yield more than a headline number, but a decision for which you can truly take responsibility.
That kind of DeFi would be quieter, grow slower, and won't dominate your social media feed like past cycles, but that's often how it looks when usage is driven by need rather than continuous incentives.
I'm not even sure if this shift is possible without breaking the parts of the system people still rely on. That's the real constraint.
DeFi cannot expand its behavioral boundaries without changing "who is suited to participate." Systems that continuously reward speed, optionality, and easy exits will still attract users who prioritize those traits.
So the path is clear. If DeFi continues to reward the behaviors it already "encourages," it will remain highly liquid but permanently niche. If it is willing to bear the cost of shaping another class of users, charm will return not as hype, but as gravity — the force that keeps capital quietly in place even when nothing exciting is happening.
