This picture was AI-generated with perchance.org How DeFi went from revolutionary to repetitive: Chasing yields, dodging rug pulls, and watching protocols rebrand. Sometimes you need to point out the problems to make things better. The DeFi Dilemma I speak for every DeFi user who has been around since 2020 when I say that it feels like DeFi is stagnating. What exactly do I mean by this? Nowadays, hardly any new, innovative and, above all, trustworthy and user-friendly new protocols are being launched that appeal to a regular user. I’m not trying to sound melancholic and say that everything was better in the past. There have been plenty of hacks and complete failures of major protocols such as Euler Finance (lost value: $179,000,000) or similar. (I only take Euler Finance as an example, I have nothing against the protocol, or the team and was not affected) [1]. However, you can’t get rid of the feeling that DeFi is no longer progressively evolving but stagnating. The large DeFi institutions, such as Uniswap, Aave, and Compound, have established themselves and are still essential. When these protocols were launched around 2020, they greatly advanced the development of DeFi and were its true beginning. This is also due to the fact that DeFi did not really exist before and therefore simple products such as swapping, lending, and borrowing were considered ‘new and innovative’. In the long run, however, they have proven to be reliable, trustworthy, and user-friendly and have thus become the DeFi giants they are today and continue to enjoy great popularity. For example, Uniswap has a daily volume of $2 to 3 billion on average [2], while Aave and Compound have a TVL of $21 billion and $2.8 billion respectively [3][4]. The Copycat Crisis — Recycled Products, Recycled Problems Over the course of time, these protocols have naturally been joined by similar spin-offs, which also play a major part today and also have their “raison d’être”, such as Jupiter and PancakeSwap for example [5][6]. Behind these front row protocols, many copycats have emerged. These new protocols want a piece of the pie and offer identical products. In order to try to be competitive, ever newer protocols emerge, which then artificially keep the yields high with their new shiny tokens to attract new users to their platforms. This is the eternal cycle that continues to this day. At a certain point, you have to ask yourself what the point is. The added value is no longer apparent. Far too often, a valued concept is recycled without there being any innovative thought behind it that improves the existing concept. As I already mentioned, the yields are often inflated by new protocols to attract users, just so that the creator team can dump the team tokens after a few months to make a profit. (Joshua Field wrote a good article about Real Yield in 2023 [7]). This pattern repeats frequently. Protocols are either abandoned or rebranded to hide their problems. Take Alpha Finance, oops I mean Stella Finance of course, oh no oops, after the latest rebrand I mean LitLayer of course [8]. You see what I mean. The user journey turns into a constant fund-moving from protocol to protocol to collect artificially inflated yields and sell the protocol tokens faster than the teams can do it, or as Joshua Field called it “a game of hot potato” [7]. This user journey is extremely unfriendly to users and new DeFi users will wake up to the bitter reality that the tokens they earned through lending, for example, have virtually no value (anymore) at the end and the actual yield is now much lower than what they hoped for. Obviously, competition is good in itself and stimulates the market, but it is questionable whether this works in the current DeFi sector. Far too often the same product is repackaged, and the competition doesn’t try to stand out from the crowd with innovative products or improvements. When Innovation Actually Means Something It is probably time to highlight Pendle here. Although the protocol has actually existed since 2021 [9], it only really experienced an upswing and hype at the end of 2023 and the beginning of 2024, with its market capitalisation growing from $200 million in December 2023 to around $6.5 billion within 6 months [10]. Why is that? Clearly because of the Eigenlayer Points [11] that were in hype at the time and could be farmed with Pendle, but also because it is a new and innovative protocol that has never existed in this form before. To describe Pendle effectively in the words of the Messari website: “Pendle offers a market for fixed and floating rates of supported yield-bearing tokens by which users can earn fixed yield, long yield (e.g., speculate on the yield of the underlying token increasing), and provide liquidity to the Pendle pool for the underlying token.” [12] Pendle, although relatively complicated, is an example of innovation in the DeFi sector. The product’s complexity may limit its adoption, especially for new users without a financial background. However, that’s a topic for another article. The point here is that the DeFi sector can do more than just repackage and exploit the ever-same products, and Pendle is a very positive standout example of this. The Reality of DeFi Today Thus, one can conclude from these developments of the last 2–3 years that DeFi is developing in an unproductive direction, which makes no sense for the adoption of crypto and DeFi. So it is hardly surprising that a ‘newbie’ buys a useless meme token with a cute dog as a logo and a funny name, because that is understandable and simple. A meme token has no purpose and no utility but is usually the entry point into crypto these days. We can no longer deny it: DeFi has evolved, but is currently a shadow of its original promise. Instead of promoting financial inclusion and pushing boundaries, we’ve allowed fraud, pointlessness, and the repackaging of the same old products to dominate the DeFi Space. Personally, as a user of several DeFi protocols, I have found myself in the same old situation again and again: My funds rotate from protocol to protocol so that I can generate some yield. However, knowing that there might often be a cash grab behind the protocols, I naturally have to sell my tokens and move on to another. And the cycle repeats, after all, I am just a normal DeFi user trying to navigate the current DeFi space. A final word from me This is my opinion and even though my attitude towards DeFi is very gloomy at the moment, and I myself notice how my interest is decreasing more and more, I love DeFi. And that’s exactly why I’m writing this article. Out of my love for DeFi, which is of course why I hope that we can improve the sector together. After all, I don’t seem to be the only one who has noticed the problem: https://x.com/IncomeSharks/status/1884367552023081014?embedable=true If you are interested in these topics, feel free to follow me, as I will continue to write articles about DeFi, crypto, and anything related. Don’t hesitate to reach out if you want to talk or collaborate about these topics and find me as @Maxo1st across social media platforms. References: [1] https://rekt.news/leaderboard/ [2] https://defillama.com/dexs/uniswap [3] https://defillama.com/protocol/aave [4] https://defillama.com/protocol/compound-finance [5] https://jup.ag/ [6] https://pancakeswap.finance/ [7] https://medium.com/contango-digital-assets/real-yield-the-future-of-defi-c3ca7aa5621c [8] https://rekt.news/trapped-between-protocols/ [9] https://messari.io/project/pendle/profile [10] https://defillama.com/protocol/pendle [11] https://finbold.com/guide/where-to-trade-eigenlayer-points/ [12] https://messari.io/project/pendle/profile This picture was AI-generated with perchance.org How DeFi went from revolutionary to repetitive: Chasing yields, dodging rug pulls, and watching protocols rebrand. Sometimes you need to point out the problems to make things better. The DeFi Dilemma I speak for every DeFi user who has been around since 2020 when I say that it feels like DeFi is stagnating. What exactly do I mean by this? Nowadays, hardly any new, innovative and, above all, trustworthy and user-friendly new protocols are being launched that appeal to a regular user. I’m not trying to sound melancholic and say that everything was better in the past. There have been plenty of hacks and complete failures of major protocols such as Euler Finance (lost value: $179,000,000) or similar. (I only take Euler Finance as an example, I have nothing against the protocol, or the team and was not affected) [1] . However, you can’t get rid of the feeling that DeFi is no longer progressively evolving but stagnating. [1] The large DeFi institutions, such as Uniswap, Aave, and Compound, have established themselves and are still essential. When these protocols were launched around 2020, they greatly advanced the development of DeFi and were its true beginning. This is also due to the fact that DeFi did not really exist before and therefore simple products such as swapping, lending, and borrowing were considered ‘new and innovative’. In the long run, however, they have proven to be reliable, trustworthy, and user-friendly and have thus become the DeFi giants they are today and continue to enjoy great popularity. For example, Uniswap has a daily volume of $2 to 3 billion on average [2] , while Aave and Compound have a TVL of $21 billion and $2.8 billion respectively [3] [4] . [2] [3] [4] The Copycat Crisis — Recycled Products, Recycled Problems Over the course of time, these protocols have naturally been joined by similar spin-offs, which also play a major part today and also have their “raison d’être”, such as Jupiter and PancakeSwap for example [5] [6] . Behind these front row protocols, many copycats have emerged. These new protocols want a piece of the pie and offer identical products. In order to try to be competitive, ever newer protocols emerge, which then artificially keep the yields high with their new shiny tokens to attract new users to their platforms. This is the eternal cycle that continues to this day. [5] [6] At a certain point, you have to ask yourself what the point is. The added value is no longer apparent. Far too often, a valued concept is recycled without there being any innovative thought behind it that improves the existing concept. As I already mentioned, the yields are often inflated by new protocols to attract users, just so that the creator team can dump the team tokens after a few months to make a profit. ( Joshua Field wrote a good article about Real Yield in 2023 [7] ). Joshua Field [7] This pattern repeats frequently. Protocols are either abandoned or rebranded to hide their problems. Take Alpha Finance, oops I mean Stella Finance of course, oh no oops, after the latest rebrand I mean LitLayer of course [8] . You see what I mean. [8] The user journey turns into a constant fund-moving from protocol to protocol to collect artificially inflated yields and sell the protocol tokens faster than the teams can do it, or as Joshua Field called it “ a game of hot potato ” [7] . This user journey is extremely unfriendly to users and new DeFi users will wake up to the bitter reality that the tokens they earned through lending, for example, have virtually no value (anymore) at the end and the actual yield is now much lower than what they hoped for. Joshua Field a game of hot potato [7] Obviously, competition is good in itself and stimulates the market, but it is questionable whether this works in the current DeFi sector. Far too often the same product is repackaged, and the competition doesn’t try to stand out from the crowd with innovative products or improvements. When Innovation Actually Means Something It is probably time to highlight Pendle here. Although the protocol has actually existed since 2021 [9] , it only really experienced an upswing and hype at the end of 2023 and the beginning of 2024, with its market capitalisation growing from $200 million in December 2023 to around $6.5 billion within 6 months [10] . Why is that? Clearly because of the Eigenlayer Points [11] that were in hype at the time and could be farmed with Pendle, but also because it is a new and innovative protocol that has never existed in this form before. [9] [10] [11] To describe Pendle effectively in the words of the Messari website: “ Pendle offers a market for fixed and floating rates of supported yield-bearing tokens by which users can earn fixed yield, long yield (e.g., speculate on the yield of the underlying token increasing), and provide liquidity to the Pendle pool for the underlying token. ” [12] Pendle offers a market for fixed and floating rates of supported yield-bearing tokens by which users can earn fixed yield, long yield (e.g., speculate on the yield of the underlying token increasing), and provide liquidity to the Pendle pool for the underlying token. [12] Pendle, although relatively complicated, is an example of innovation in the DeFi sector. The product’s complexity may limit its adoption, especially for new users without a financial background. However, that’s a topic for another article. The point here is that the DeFi sector can do more than just repackage and exploit the ever-same products, and Pendle is a very positive standout example of this. The Reality of DeFi Today Thus, one can conclude from these developments of the last 2–3 years that DeFi is developing in an unproductive direction, which makes no sense for the adoption of crypto and DeFi. So it is hardly surprising that a ‘newbie’ buys a useless meme token with a cute dog as a logo and a funny name, because that is understandable and simple. A meme token has no purpose and no utility but is usually the entry point into crypto these days. We can no longer deny it: DeFi has evolved, but is currently a shadow of its original promise. Instead of promoting financial inclusion and pushing boundaries, we’ve allowed fraud, pointlessness, and the repackaging of the same old products to dominate the DeFi Space. Personally, as a user of several DeFi protocols, I have found myself in the same old situation again and again: My funds rotate from protocol to protocol so that I can generate some yield. However, knowing that there might often be a cash grab behind the protocols, I naturally have to sell my tokens and move on to another. And the cycle repeats, after all, I am just a normal DeFi user trying to navigate the current DeFi space. A final word from me This is my opinion and even though my attitude towards DeFi is very gloomy at the moment, and I myself notice how my interest is decreasing more and more, I love DeFi. And that’s exactly why I’m writing this article. Out of my love for DeFi, which is of course why I hope that we can improve the sector together. After all, I don’t seem to be the only one who has noticed the problem: https://x.com/IncomeSharks/status/1884367552023081014?embedable=true https://x.com/IncomeSharks/status/1884367552023081014?embedable=true If you are interested in these topics, feel free to follow me, as I will continue to write articles about DeFi, crypto, and anything related. Don’t hesitate to reach out if you want to talk or collaborate about these topics and find me as @Maxo1st across social media platforms. @Maxo1st References: [1] https://rekt.news/leaderboard/ https://rekt.news/leaderboard/ [2] https://defillama.com/dexs/uniswap https://defillama.com/dexs/uniswap [3] https://defillama.com/protocol/aave https://defillama.com/protocol/aave [4] https://defillama.com/protocol/compound-finance https://defillama.com/protocol/compound-finance [5] https://jup.ag/ https://jup.ag/ [6] https://pancakeswap.finance/ https://pancakeswap.finance/ [7] https://medium.com/contango-digital-assets/real-yield-the-future-of-defi-c3ca7aa5621c https://medium.com/contango-digital-assets/real-yield-the-future-of-defi-c3ca7aa5621c [8] https://rekt.news/trapped-between-protocols/ https://rekt.news/trapped-between-protocols/ [9] https://messari.io/project/pendle/profile https://messari.io/project/pendle/profile [10] https://defillama.com/protocol/pendle https://defillama.com/protocol/pendle [11] https://finbold.com/guide/where-to-trade-eigenlayer-points/ https://finbold.com/guide/where-to-trade-eigenlayer-points/ [12] https://messari.io/project/pendle/profile https://messari.io/project/pendle/profile

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

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