Original Title: DeFi Has Lost Its Charm
Original Author: @0xPrince
Translated by: Peggy, BlockBeats
Editor's Note: DeFi has not stagnated or collapsed, but it is losing something that was once most important: the sense of "exploration."
This article reviews the evolution of DeFi from early exploration to gradual maturity, pointing out that after the infrastructure has improved and trading models have solidified, the ways of participating in on-chain finance are becoming more homogeneous: yields have become a basic expectation, lending resembles short-term financing, and incentives dominate user behavior. The author does not deny the value of DeFi but instead questions a more difficult issue: after efficiency and scale have been fully optimized, can DeFi still shape new behaviors, rather than just serve the existing small portion of users?
The following is the original text:
TL;DR
The ways people use DeFi are becoming highly homogeneous. The market and infrastructure have matured, but curiosity has been replaced by caution; yields have shifted from "returns earned by users taking risks" to "waiting for compensation to be paid," and participation increasingly revolves around incentives.
The allure of DeFi is slowly fading. I am not expressing this in a dramatic way. It has not stopped operating or evolving; what has truly changed is that you rarely feel like you are stepping into something genuinely new.
I entered this industry in 2017 (the ICO era). Everything then seemed rough, unfinished, and even a bit out of control. Chaotic, but also open. You felt that 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 were not just trading tokens; you were watching in real-time how market structures were forming. The new primitives were not simple upgrades but forced you to rethink "what is possible." Even if the system could go wrong, it still felt like exploration because everything was still in the process of being generated.
Today, much of DeFi seems to just repeat the same script with cleaner execution. The infrastructure is more mature, the interfaces are better, and the models have long been understood. It is still effective, but it no longer frequently opens up new frontiers, which changes people's relationship with it.
People are still building, but the behavioral patterns reinforced by DeFi have changed.
The Optimized Form of DeFi
DeFi has become highly speculative because trading was the first real demand to be moved en masse onto the chain.
In the early days, traders were the first true "heavy users." As they flooded in, the system naturally began to adjust around their needs.
What traders value are: options, speed, leverage, and the ability to exit at any time. They dislike being locked in and the risks of relying on others' discretion. Protocols that align with these instincts grew rapidly; those that required users to act differently, even if they could operate, often needed to compensate for this mismatch through "subsidies."
Over time, this shaped the psychological expectations of the entire ecosystem: participation itself began to be seen as a "behavior that should be compensated," rather than because the product is useful under normal circumstances.
Once this expectation is formed, people do not "step out"; they only become more skilled: rotating faster, holding stablecoins longer, and only appearing when trading conditions are clearly favorable. This is not a moral judgment but a rational response to the environment created by DeFi.
Lending Becomes Financing, Not Credit
Lending most clearly reflects the gap between DeFi's narrative and its actual path to scaling.
In traditional understanding, lending means credit, and credit means time—meaning someone borrows for a real need, and someone is willing to bear the uncertainty during that time.
But in DeFi, what has truly scaled is more like short-term financing. The main borrowers are not borrowing for "terms," but for positions: leverage, cycles, basis trading, arbitrage, or directional exposure. People borrow money not to hold a loan.
Lenders have also adapted to this reality. They no longer act like credit underwriters but more like liquidity providers: valuing exit, hoping for redemption at face value, and preferring terms that allow for sustainable repricing. When both parties act this way, the market resembles a money market rather than a credit market.
Once the system grows around this preference, it becomes extremely difficult to build a true credit structure on it. You can add features, but you cannot forcibly change motivations.
Yields Become a "Basic Expectation"
As time goes on, yields are no longer just returns but have become 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 "there will always be something you didn't anticipate going wrong." Users gradually learn that bearing these risks should come with clear compensation.
This is reasonable in itself, but it changes behavior.
Capital will not gradually retreat from high yields to normal yields and continue to participate; it will exit directly. Users maintain liquidity, waiting for the next moment to "be rewarded for participation" again.
The result is: intensity is abundant, but continuity is lacking. Activity surges when incentives are activated and quickly fades after incentives end. It seems like adoption, but in reality, it is often "rented behavior."
When participation only occurs within incentive windows, anything that wants to exist long-term becomes difficult to build.
The Trust Issue
Another factor that has fundamentally changed the ecosystem is trust.
Years of vulnerabilities, exit scams, and governance failures have reshaped user psychology. Novelty no longer sparks curiosity but triggers vigilance. Even mature users tend to enter later, take smaller positions, and prefer systems that "survive" rather than those that are "theoretically better."
This may be healthy, but the culture has changed accordingly: exploration has turned into due diligence, and the frontier has become a checklist. The space has become more serious, and seriousness does not equate to charm.
What is more challenging is that DeFi trains users to demand high compensation for risks while simultaneously making them less willing to take on new risks. This compresses the middle ground that past experiments relied on for survival.
Why Both Sides Are "Right"
This is precisely where the debates around DeFi often misalign.
If you do not like DeFi, you are not wrong—it does indeed seem closed and self-referential, with many products serving the same small group of people, and historical growth largely relying on incentives.
If you still believe in DeFi, you are also not wrong—permissionless access, global liquidity, composability, and open markets remain powerful concepts.
The mistake lies in pretending that these two are inherently the same goal.
DeFi has not failed; it has successfully optimized a small portion of intentions. It is this success that makes it harder to expand new behavioral models outward.
Whether you see this as progress or stagnation entirely depends on what you initially expected DeFi to become.
How Charm Can Return
DeFi will not regain its charm by recreating DeFi Summer. Frontier moments do not repeat.
What is truly fading is not innovation but the feeling that "behaviors are still being changed." When the system no longer reshapes how people use it, and only execution efficiency remains, the sense of exploration disappears.
If DeFi wants to become important again, it must do something harder: build structures that make different types of behavior rational.
Make capital willing to stay at certain times; make terms understandable and exit options available, rather than burdens to be reluctantly endured; make yields no longer just headline numbers but decisions that can be genuinely underwritten.
Such a DeFi would be quieter, grow more slowly, and would not occupy the timeline like past cycles—but this often means that usage is driven by real demand rather than continuous incentives.
I am not even sure if this transformation is possible without undermining the systems people still rely on. This is the real constraint.
If DeFi does not change "who participation is meaningful for," it cannot expand the boundaries of behavior.
A system that continuously rewards speed, options, and quick exits will only continue to attract users who optimize these traits.
The path is actually quite clear:
If DeFi continues to reward the behaviors it has already optimized, it will always remain highly liquid but permanently niche;
If it is willing to bear the costs to shape a different type of user, then charm will not return in the form of hype but will return as a gravitational force—a silent power that can keep capital around even when nothing happens.
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