DeFi yields are crashing so hard that they can't compete with a traditional savings account

What Happened

DeFi lending yields have collapsed to levels below traditional savings accounts. Aave, the largest DeFi protocol, now offers 2.61% APY on USDC, below Interactive Brokers' 3.14%. Once-dominant protocols like Ethena saw yields drop from 40% to 3.5% as token incentives ended. Only specialized products with real-world asset backing exceed traditional rates. DeFi's core investment thesis of higher returns justifying higher risk has weakened significantly.

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