Key Takeaways

High yields have attracted retail investors to DeFi, but institutions prioritize reliability.
Decentralized finance must evolve to match the consistency of traditional finance to gain institutional trust.
Predictable execution and performance are essential for DeFi to transition from a speculative gamble to a dependable infrastructure.
The future of DeFi will focus on delivering stable and predictable outcomes rather than chasing high annual percentage yields (APYs).

DeFi needs higher certainty, not higher yield

The landscape of decentralized finance (DeFi) is evolving, and the future of its adoption hinges on more than just high yields. Consistency and reliability are key factors necessary for attracting institutional investors. This article explores the importance of stability in DeFi and how it might shape the next phase of the industry.

The Illusion of Yield

DeFi has captivated users with the allure of substantial yields. The idea that funds could earn money passively attracted many. However, the allure of yield loses significance if the underlying systems are unstable. Although retail investors might overlook such risks, institutions and businesses are acutely aware of the need for precision and dependability. For these entities, the focus should shift toward creating DeFi applications that offer the same reliability as the Web2 applications we utilize daily.

Mass adoption of DeFi was anticipated between 2023 and 2025, but as we approach the end of 2025, it is evident that significant progress is still needed. With crypto's increasing importance in the financial sector, acknowledging the risks that deter institutions is crucial.

Addressing DeFi's Challenges

Take Solana, a blockchain solution that has gained user trust for its speed and reliability. However, when it comes to institutional usage that involves high-frequency transactions and automated systems, “almost” is simply not enough. For hedge funds or exchanges, a single glitch can disrupt operations and financial reporting significantly. While Solana has won retail users' trust, institutions require assurance that transactions will execute flawlessly every time.

The Essential Nature of Reliability

Reliability is fundamental for transforming crypto from an experimental technology into a robust economy. While institutional investors may be attracted to APYs of 5%, 10%, or even higher, they prioritize reliability above all. Businesses handling billions in assets must be accountable to customers, regulators, and the financial industry. Trusting fallible systems is a risk they cannot afford.

Institutions considering DeFi frameworks demand precision and execution that is guaranteed. Speculative returns become less crucial when seeking to transition a substantial portion of global GDP onto blockchain networks.

The Shift Toward Determinism

Beyond the need for speed, the crypto industry demands certainty. Deterministic execution ensures that users know precisely when their transactions will be processed and what to expect upon completion. This level of reliability fosters confidence among all participants, from individual traders to large institutions.

The key to achieving widespread DeFi adoption lies not in offering more speculative rewards, but in ensuring that systems remain reliable even under pressure. When networks can pledge accuracy and smooth operation, DeFi can evolve into a credible infrastructure rather than a high-stakes gamble.

Moving Beyond Yield Wars

Historically, DeFi has gone through various cycles, including yield farming and scaling, but it has yet to fully engage institutions. The next wave will pivot away from APY-driven pursuits toward those capable of delivering reliable, rapid outcomes.

The forthcoming chapter for DeFi is poised to favor participants who can offer stability, speed, and precision—essentially making DeFi feel dependable in the best sense.

Opinion by Robin Nordnes, Co-founder and CEO of Raiku.