DeFi must ditch hype for sustainable liquidity
The post DeFi must ditch hype for sustainable liquidity appeared on BitcoinEthereumNews.com. Polygon Labs CEO Marc Boiron called for a fundamental shift in how decentralized finance (DeFi) protocols manage liquidity, labeling the sector’s ongoing liquidity crisis as “self-inflicted.” In an exclusive interview, Boiron outlined Polygon’s vision for sustainable DeFi, emphasizing chain-owned liquidity and transparent economic models as the path forward. Boiron criticized DeFi protocols for fueling a cycle of “mercenary capital” by offering sky-high annual percentage yields (APYs) through token emissions. “It’s just renting liquidity; it’s not real loyalty,” he told Cointelegraph, noting that such strategies lead to fleeting liquidity that vanishes when yields drop or token prices falter. This reliance on short-term hype, he argued, undermines the sector’s stability and deters institutional adoption. Chasing DeFi stability over hype To break that cycle, Boiron urged protocols to prioritize fundamentals over flashy returns. “Sustainable DeFi needs models where liquidity sticks around for the right reasons,” he said, pointing to Polygon’s POL token as a blueprint for achieving this. “Protocols can put their treasury to work, earning yield instead of diluting token value. Over time, this strengthens the treasury rather than just paying off temporary liquidity providers.” Polygon’s approach centers on chain-owned liquidity, where protocols build treasuries to directly own liquidity positions rather than relying on external providers. Unlike token emissions, which Boiron said attract liquidity quickly but dilute token value, owned liquidity offers long-term stability and capital efficiency. The only trade-off in the plan, according to Boiron, is time. He explained that building a treasury through captured fees, bond mechanisms or limited emissions requires patience and disciplined management. Polygon prepares to onboard traditional finance in crypto For traditional finance (TradFi), liquidity stability and predictability are prerequisites for full DeFi adoption: “Traditional finance runs on models that need stable, reliable market access. If a DeFi protocol suddenly loses liquidity or slippage spikes, it creates…
The post DeFi must ditch hype for sustainable liquidity appeared on BitcoinEthereumNews.com.
Polygon Labs CEO Marc Boiron called for a fundamental shift in how decentralized finance (DeFi) protocols manage liquidity, labeling the sector’s ongoing liquidity crisis as “self-inflicted.” In an exclusive interview, Boiron outlined Polygon’s vision for sustainable DeFi, emphasizing chain-owned liquidity and transparent economic models as the path forward. Boiron criticized DeFi protocols for fueling a cycle of “mercenary capital” by offering sky-high annual percentage yields (APYs) through token emissions. “It’s just renting liquidity; it’s not real loyalty,” he told Cointelegraph, noting that such strategies lead to fleeting liquidity that vanishes when yields drop or token prices falter. This reliance on short-term hype, he argued, undermines the sector’s stability and deters institutional adoption. Chasing DeFi stability over hype To break that cycle, Boiron urged protocols to prioritize fundamentals over flashy returns. “Sustainable DeFi needs models where liquidity sticks around for the right reasons,” he said, pointing to Polygon’s POL token as a blueprint for achieving this. “Protocols can put their treasury to work, earning yield instead of diluting token value. Over time, this strengthens the treasury rather than just paying off temporary liquidity providers.” Polygon’s approach centers on chain-owned liquidity, where protocols build treasuries to directly own liquidity positions rather than relying on external providers. Unlike token emissions, which Boiron said attract liquidity quickly but dilute token value, owned liquidity offers long-term stability and capital efficiency. The only trade-off in the plan, according to Boiron, is time. He explained that building a treasury through captured fees, bond mechanisms or limited emissions requires patience and disciplined management. Polygon prepares to onboard traditional finance in crypto For traditional finance (TradFi), liquidity stability and predictability are prerequisites for full DeFi adoption: “Traditional finance runs on models that need stable, reliable market access. If a DeFi protocol suddenly loses liquidity or slippage spikes, it creates…
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