Can DeFi Survive Beyond Incentive Farming?

DeFi is experiencing a revival with the rise of new blockchains like Berachain, TON, Plume, and Sonic, each offering aggressive yield incentives reminiscent of 2021’s yield farming boom. However, the key question remains: are these ecosystems sustainable once incentives run out?

While incentives are a powerful bootstrapping tool, they are only the beginning. The current DeFi market is highly fragmented, with more chains launching than successful protocols. Many of these blockchains struggle to attract users beyond a small pool of active participants, resulting in capital and TVL dilution across ecosystems rather than meaningful growth.

A critical issue is the mismatch between institutional liquidity needs and retail-driven platforms. Many chains lack the infrastructure to support large capital inflows due to missing integrations, weak custody support, and underdeveloped lending and AMM protocols. Without strong stablecoin bases, deep DEX liquidity, and bridge infrastructure, it’s difficult to create lasting utility or attract institutional investors.

Poorly designed incentive programs further hinder growth, often benefiting insiders while failing to generate long-term user engagement. For ecosystems to thrive post-incentives, they must prioritize real utility, capital efficiency, and robust financial primitives like lending markets and stablecoin liquidity. Chains like TON and Hyperliquid are setting early examples with token use cases beyond yield.

The future of DeFi depends on building sustainable capital formation models. Deep integrations with custody providers like Fireblocks, liquidity in BTC and ETH, and connections with oracle and bridge networks are essential. Ultimately, ecosystems that view incentives as a launchpad — not the goal — and focus on long-term fundamentals will define the next wave of DeFi innovation.