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The Shift from Emission-Based to Usage-Based Yield in DeFi

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by Zainab Kamara

2 months ago


The decentralized finance (DeFi) sector is undergoing a significant transformation as it shifts from traditional emission-based yield models to more sustainable approaches grounded in real economic activity. Based on the data provided in the document, this evolution marks a pivotal moment for the industry, promising enhanced stability and reliability in yield generation.

Shift in Yield Generation Strategies

Protocols are increasingly focusing on generating yield through actual usage and market dynamics rather than relying on token inflation. This change is anticipated to foster a healthier ecosystem, where yields are tied to the genuine economic activities within the network. As a result, investors can expect more predictable returns, reducing the volatility often associated with DeFi investments.

Attracting Institutional Investors

Moreover, this transition could attract a broader range of participants, including institutional investors who seek more stable investment opportunities. By aligning yield generation with real-world economic factors, DeFi protocols are positioning themselves for long-term growth and sustainability in an ever-evolving financial landscape.

The recent market downturn has raised concerns among sUSD investors, highlighting vulnerabilities in the DeFi landscape. For more details on the impact of this situation, you can read the full article here.

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