DeFi Yield Become Too Low to Keep Users On-Chain?

DeFi yield has become a topic of discussion, with rates near 2.6% for lending protocols on Ethereum, compared to 3.14% from traditional banks.

The Decline of Interest Rates in Decentralized Lending

The peer-to-peer lending market has matured, with rates dropping from 5% or more for stablecoins like USDC between 2020 and 2023.

Technical and Liquidity Risks

High rates previously compensated for technical and liquidity risks, but with the convergence of interest rates with the US Federal Reserve, decentralized lenders can no longer offer higher returns.

Impact on User Activity

Despite low rates, the number of unique users interacting with decentralized applications reached 27.7 million in 2025, a record figure, indicating a shift toward other operations that generate value.

Tokenized Real-World Assets

Capital has migrated toward tokenized real-world assets, such as US Treasury bonds, offering returns of 4-5% with a different risk profile.

The Shift Toward Other Forms of On-Chain Value

The Tron blockchain, with approximately 3.2 million daily active users, illustrates the shift toward other forms of on-chain value, beyond passive interest.

Key Takeaways

• DeFi yield has decreased, with rates near 2.6% for lending protocols on Ethereum.
• The number of unique users interacting with decentralized applications reached 27.7 million in 2025.
• Capital has migrated toward tokenized real-world assets, offering returns of 4-5%.
• The shift toward other forms of on-chain value is driven by user activity beyond passive interest.

Frequently Asked Questions

What is the current DeFi yield?

The current DeFi yield is near 2.6% for lending protocols on Ethereum.

Why are users staying on-chain despite low DeFi yield?

Users are staying on-chain due to the shift toward other operations that generate value, beyond passive interest.