This article is from Prince, co-founder of Avon.
Compiled by Odaily Odaily( @OdailyChina ); Translated by Azuma ( @azuma_eth )
TL;DR
People's use of DeFi has become highly similar. The market and infrastructure are maturing, but users' mentality has gradually shifted from curiosity to caution. The reward mechanism has changed from "users bear the risks and rewards themselves" to "users wait to be rewarded," and participation behavior has gradually converged around incentives.
The fading DeFi
I'm not kidding when I say DeFi is fading. It hasn't stopped operating, nor has it stopped evolving. What has really changed is that you rarely feel like you're "experiencing something completely new" anymore.
I entered this market in 2017 (the ICO era). At that time, everything seemed incomplete, even somewhat out of control, and the environment was chaotic, but also very open. You could still believe that all market perceptions were only temporary, and the next fundamental innovation could reshape the entire ecosystem.
The DeFi Summer was the first time this belief became tangible. You weren't just trading tokens; you were witnessing the formation of a completely new market structure in real time. It wasn't a simple upgrade; it forced you to rethink "what is possible." Even when the system encountered problems, it felt like an exploration, because the entire system was still evolving.
Today, much of DeFi is more like repeating the same script with cleaner execution methods. The infrastructure is more mature, the interface is more user-friendly, and the models are fully understood by users. It's still effective, but it doesn't seem to be expanding into new territories as frequently, which has changed the relationship between users and it.
People are still building on it. What's really changing is what kind of user behavior patterns DeFi "encourages".
Evolution of User Behavior Patterns
The reason DeFi has become highly speculative is that the earliest thing people wanted to do on a large scale on the blockchain was trading.
In the early days, traders were the first truly heavy users. As they flooded in, the system naturally adapted to their needs.
Traders value choice, speed, leverage, and easy exit. They dislike being locked in and the risk of relying on others' subjective judgment. Protocols that align with these intuitions grow rapidly; those that require users to change their behavior can also function, but usually only by charging users to tolerate this mismatch.
Over time, this has shaped the psychological expectations of the entire ecosystem— user participation has begun to be seen as an act that requires market compensation, rather than because the product is useful under normal conditions.
Once this psychological expectation is formed, it's difficult for people to shake it off; instead, they increasingly take it for granted. Users rotate faster, stay in stablecoins longer, and only act when the opportunity is clear enough. This isn't a moral judgment, but a rational response to the environment created by DeFi.
Lending has become "financing" rather than "credit."
Lending is the clearest example of the discrepancy between how DeFi is often portrayed and its actual scaled form.
On the surface, lending implies credit. Credit implies time, that someone is borrowing for reasons outside the market, and that someone is endorsing this time risk.
However, the products that truly scale up in DeFi are closer to short-term financing. The mainstream borrowers are not borrowing because they need a term, but to acquire positions—leverage, revolving loans, basis trading, arbitrage, directional exposure, and so on. People borrow money not to hold a loan for the long term.
Lenders have adapted to this situation. They act more like liquidity providers than credit guarantors. They are more focused on exits, prefer par redemption, and favor terms that allow for continuous repricing. When both sides act in this way, the market clearing process resembles a money market rather than a credit market.
Once the system grows around this preference, building a true credit structure on top of it becomes extremely difficult. You can add features, but you can't force users to change their motivations.
Earnings have become the benchmark expectation
Over time, the benefits are no longer just a return, but have begun to become a legitimate reason for participation.
On-chain risks extend beyond the volatility of the assets themselves; they also include smart contract risks, governance risks, oracle risks, bridge risks, and the ever-present feeling that "things might go wrong in ways you haven't modeled." Users are gradually realizing that bearing these risks should be met with visible compensation, and this expectation is reasonable in itself.
However, it changes user behavior. Funds no longer remain after gradually declining from high returns to normal levels; instead, they leave immediately. Users maintain high liquidity in their funds, waiting for the next opportunity to participate and be rewarded again.
The result is that project data growth is often "intense but lacks continuity." Activity surges when incentives are activated and cools down rapidly when incentives disappear. What appears to be adoption is essentially leasing.
When participation only occurs during the incentive window, anything that tries to persist in the long term becomes difficult to build.
Trust issues
Another variable that changes everything is trust.
Years of exploitation, platform collapses, and governance failures have altered user mentality. Novelty no longer sparks curiosity but instead evokes wariness. Even seasoned users are now more likely to observe for longer periods, place smaller positions, and prefer systems that have "survived long enough" to those that "look better."
This may be healthy, but it changes the market culture. Exploration has turned into due diligence, and the entire market has to be more serious, which is clearly not the same as charisma.
A more complex situation arises because, on the one hand, users are accustomed to demanding high compensation for risks, while on the other hand, they are increasingly unwilling to take on new risks. This has compressed the previously acceptable middle ground for experimentation.
Why are both sides "partially correct"?
This is precisely where the DeFi debate often falls into different categories.
If you don't like DeFi, you're not wrong. It does sometimes seem like self-indulgence, with many products serving the same small group of users, and historical growth largely driven by incentives rather than stable demand.
If you believe in DeFi, you're not wrong. Permissionless access, global liquidity, composability, and open markets remain powerful concepts.
The mistake was assuming these two were once the same goal. DeFi hasn't failed. It successfully optimized for a small subset of behaviors, but that success has made it harder to scale to others.
Whether this is progress or stagnation depends entirely on what you originally expected DeFi to become.
How to regain charm
DeFi will not regain its allure by recreating a DeFi Summer. History never repeats itself.
What truly disappears is not innovation itself, but the feeling that "behavior is still changing." Once a system stops reshaping how people use it and focuses only on execution, the sense of exploration vanishes.
If DeFi is to shine again, it must do something even more difficult: create a structure that makes different behaviors rational . Make the retention of funds justifiable; make time limits understandable and exitable, rather than a reluctantly accepted burden; make yields not just a headline number, but a decision you can truly take responsibility for.
That kind of DeFi would be quieter, grow more slowly, and not dominate your social media timeline like in the past, but that's often what it looks like when usage is driven by demand rather than continuous incentives.
I'm not even sure if such a shift is possible without disrupting parts of the system that people still rely on. That's the real constraint.
DeFi cannot expand its behavioral boundaries unless it changes the question of "who is suitable to participate." Systems that continuously reward speed, choice, and easy exit will continue to attract users who value these qualities.
So the path is clear. If DeFi continues to reward the behavior it has already "encouraged," it will maintain extremely high liquidity but will also remain permanently in a niche market. If it is willing to bear the cost of shaping another type of user, its allure will not return in the form of hype, but in the form of gravity—the power to keep capital quietly entrenched even when nothing exciting happens.
