DeFi revenue fell to much lower levels in 2026 and was considered a sign of a maturing industry. However, the recent Drift Protocol hack has raised the issue of technical risk and whether current returns offset the value of putting assets on chain.
DeFi yields are declining across most protocols, and the early days of high-yield farming appear to be over. DeFi has become a more mature sector, where protocols rely on stablecoins and their predictable returns tokenized bonds or money funds.
Peak farming days often relied on the issuance of new tokens to offset the risk, and traders would recoup their initial deposit in a short time.
Santiago R.founder of Inversion, believes that on-chain returns should be much higher to offset current technical risks.
“I am constantly asked what is enough revenue to enter the chain. I think it’s at least 18% today. Anything below that isn’t worth the hassle or risk,” Santiago R. explained in an X after.
He doesn’t provide details on how to generate those returns, but points to smart contract risk, general holdings exposure, and general protocol risk.
DeFi returns should be higher to compensate for the technical risk
DeFi is still not anonymous and has often exposed whale wallets. Confidential use is not yet that widespread.
In general, DeFi calculates risk and return in financial terms, usually tied to the volatile nature of crypto assets. Protocols do not take into account common vulnerabilities, which have often led to dramatic losses.
On-chain rates are also low due to limited demand for assets. A low return on deposited tokens does not mean the investment is low risk, but that risk may not be priced correctly, noted Santiago R. He proposes higher returns, in addition to selling insurance products against losses.
DeFi returns have been declining in recent months
In fact, DeFi rates have fallen below US Treasury levels, down 3.8% annually. For some lending protocols, annualized returns start at virtually zero.
There are still high returns on individual liquidity pairs on DEX, which offset the risk of a temporary loss or a symbolic back pull. However, most Aave V3 and other credit vaults have much lower yields.
While individual safes can still offer high hypothetical returns, overall returns have fallen to their lowest level since 2022.
There are also no more general periods of outsized returns, partly due to the more bearish outlook for the crypto market. High returns only occur during periods of hype, but the general enthusiasm ended with the first DeFi summer.
For stablecoin liquidity pairs in particular, returns are often below 0.5%. For Morpho, vault returns range from virtually zero to as much as 352% for the riskiest vaults.
The recently operated Drift protocol offered relatively high returns of up to 16%, which partially reflected the crypto risk. The Protocol’s vaults were considered low-risk and mature, at least until the $280 million hack on April 1.