DeFi has neither stagnated nor collapsed, but it is losing something that was once the most important: the sense of exploration.
Article author, source: MarsBit
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 convergent: yields have become basic expectations, lending is more like short-term financing, and incentives dominate user behavior. The author does not deny the value of DeFi but raises a more difficult question: after efficiency and scale have been fully optimized, can DeFi still shape new behaviors, rather than just serving that small portion of existing users?
The original text is as follows:
TL;DR
The way people use DeFi is becoming highly homogenized. The market and infrastructure have matured, but curiosity has been replaced by caution; returns have shifted from 'users actively taking risks to earn returns' to 'waiting to be compensated', and participation increasingly revolves around incentives.
The feeling that DeFi gives is slowly fading. I am not expressing this in a dramatic way. It has not stopped operating, nor has it stopped evolving; what has truly changed is: you rarely feel that you are stepping into something genuinely new.
I entered this industry in 2017 (the ICO era). Everything back 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 weren't just trading tokens; you were watching in real-time as market structures took shape. The new primitives weren't simple upgrades; they forced you to rethink 'what is possible'. Even if the system goes wrong, it still feels like exploration because everything is still in generation.
And today, many DeFi projects seem to simply repeat the same script with cleaner execution. The infrastructure is more mature, the interfaces better, and the models are already well understood. It is still effective, but it no longer frequently opens up new territories, which changes people's relationship with it.
People are still building, but the behavioral patterns reinforced by DeFi have changed.
The forms optimized by DeFi.
DeFi became highly speculative because trading was the first real demand to be moved to the chain on a large scale.
In the early days, traders were the first true 'heavy users'. When 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 risk of relying on others' discretion. Protocols aligned with these instincts grow rapidly; whereas protocols requiring users to act differently, even if operational, often need to compensate for this mismatch through 'subsidies'.
Over time, this has shaped the psychological expectations of the entire ecosystem: participation itself has begun to be seen as a 'behavior that should be rewarded', rather than because the product is useful under normal circumstances.
Once this expectation forms, people do not 'walk away', but become more skilled: rotating faster, holding stablecoins longer, appearing only when trading conditions are clearly favorable. This is not a moral judgment but a rational response to the environment created by DeFi.
Lending became financing, not credit.
Lending most clearly reflects the gap between DeFi's narrative and its actual scaling path.
In traditional understanding, lending means credit, and credit means time—meaning someone borrows for a real need, and it also means someone is willing to bear the uncertainty during that time.
But what truly scaled in DeFi was more like short-term financing. The main borrowers were not there for 'terms', but for positions: leverage, cycles, basis trading, arbitrage, or directional exposure. People borrowed 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 exits, hoping to redeem at face value, and preferring terms that allow for sustainable repricing. When both sides 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 top of it. You can add features, but you cannot forcefully change motivations.
Returns have become a 'basic expectation'.
As time goes on, returns are no longer just returns, but a legitimacy proof of participation.
On-chain risks include not only price volatility but also contract risks, governance risks, oracle risks, cross-chain risks, and the uncertainty of 'there will always be places you didn't think of where problems will arise'. Users gradually learn that bearing these risks should come with clear compensation.
This is reasonable in itself, but it changes behavior.
Capital does not gradually fall from high returns to normal returns while continuing to participate; it exits directly. Users maintain liquidity, waiting for the next moment to 'be rewarded for participation' again.
The result is: strength is abundant, but continuity is insufficient. Activity surges when incentives are activated, then quickly fades after incentives end. What seems like adoption is often 'rented behavior'.
When participation only appears within incentive windows, anything wanting to exist long-term becomes difficult to build.
Trust issues.
Another factor that fundamentally changes the ecosystem is trust.
Years of vulnerabilities, scams, and governance failures have reshaped user psychology. Novelty no longer stimulates curiosity but triggers caution. Even mature users tend to enter later, with smaller positions, and prefer systems that prioritize 'survival' over those that are 'theoretically better'.
This may be healthy, but the culture changes accordingly: exploration becomes due diligence, and the frontier becomes a checklist. The space becomes more serious, and seriousness does not equal charm.
What is more difficult is that DeFi trains users to demand high compensation for risk while simultaneously making them less willing to take on new risks. This compresses the middle ground that past experiments relied upon.
Why both sides are 'right'.
This is precisely where the debates within DeFi often misalign.
If you don’t like DeFi, you’re not wrong—it does seem closed and self-cycling, with many products serving the same small group, 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 ideas.
The mistake is pretending that these two were originally the same goal.
DeFi has not failed; it has successfully optimized a small portion of intent. It is this success that makes it harder to expand new behavioral patterns.
Whether you see this as progress or stagnation completely depends on what you initially expected DeFi to become.
How charm returns.
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 'behavior is 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 the harder thing: build structures that make different types of behavior rational.
Let capital be willing to stay at certain times; let deadlines become understandable and exit options, rather than a burden to endure; let returns be more than just headline numbers, but decisions that can be truly underwritten.
Such DeFi would be quieter, grow slower, and would not occupy the timeline like past cycles—but this usually means: usage is driven by real demand, not ongoing incentives.
I am not even sure if this transformation is possible without disrupting the systems people still rely on. That is the real constraint.
If DeFi does not change 'who participation matters to', it cannot expand the boundaries of behavior.
A system of continuous rewards, 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 be highly liquid but also permanently niche;
If it is willing to bear the cost to shape a different type of user, then charm will not return in the form of hype but will return in the form of gravity—a silent force that allows capital to stay even when nothing happens.