DeFi Yield Plummets to Record Lows, Raising Concerns Over On-Chain Risk

DeFi yield has been sliding on most protocols in recent months, reaching levels that some consider too low to offset the risks of on-chain transactions.

The industry's shift towards more stable and predictable yields, such as those offered by tokenized bonds or money funds, has led to a decrease in returns for users. This trend is evident even when compared to US T-bills, which offer an annualized yield of 3.8%.

On-chain rates are also affected by the limited demand for assets, resulting in low yields on deposited tokens. However, this does not necessarily mean that the investment is low-risk; rather, it may indicate that risk is not being priced correctly.