DeFi now has a yield-bearing collateral asset that is native to crypto, Ethena Labs Conor Ryder writes for 'Staking Week.'
Decentralized finance has a problem. We set out to build a financial alternative, driven by the shortcomings of opaque businesses that often put their interests over those of their customers. The goal was a decentralized, self-governed economy that was transparent and largely independent from external influences.
While I’m fully aligned with a pragmatic approach — making short-term sacrifices that give us a better chance of reaching an end goal — the time has come to accept that DeFi as it stands today is not so decentralized. Blockchain finance might be a better term.Stablecoins Decentralized stablecoins are the holy grail, but we have seen a lack of innovation in the space since the collapse of Terra. Novel approaches are dismissed immediately if they dare suggest anything but an overcollateralized approach. DeFi was left scarred and shaken after Terra, and an emphasis since then has been placed on security, at the expense of innovation.
While it’s positive to see stablecoin adoption, regardless of who issues them, it's important for DeFi to offer a competitive decentralized stablecoin that can stand on its own two feet and put the “De” back in DeFi.Second, the rise of U.S. bond yields has shifted the real risk-free rate to 5%, leaving crypto collateral assets that earn little to no passive income facing a competitive mountain to climb.
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