In the rapidly evolving landscape of decentralized finance (DeFi), the era of relying on inflationary token incentives for growth is coming to an end, according to Michael Egorov, the founder of Curve Finance. In a recent interview with Cointelegraph, Egorov emphasized the critical need for DeFi protocols to generate real revenue to sustain their operations and attract liquidity.
“Your yield should come from revenues, not from tokens,” Egorov told Cointelegraph. “You need real revenues flowing.” This shift in perspective marks a significant departure from the DeFi summer of 2020, when triple-digit and even 1,000% annual percentage rates (APRs) drew substantial capital into new protocols, often driven by speculative premiums rather than fundamental value.
From Speculation to Sustainability
Egorov contrasted the current environment with the speculative frenzy of 2020, where high token rewards could offset losses if projects later failed. “Right now, it’s absolutely impossible. If you deposit something somewhere, you need to be sure that technically the protocol is safe for at least years,” he said. This change in user behavior reflects a more cautious approach, with investors re-evaluating the risks associated with DeFi protocols.
According to DefiLlama, DeFi’s total value locked (TVL) has fallen by about 38% over the past six months, dropping from $158 billion on Aug. 23, 2025, to about $98 billion as of Monday. This decline underscores the need for DeFi projects to focus on sustainable revenue models rather than relying on token emissions to attract and retain users.
The Role of Tokens in DeFi
Egorov also highlighted the importance of tokens in achieving decentralization rather than speculative gains. “Tokens are needed for decentralization, not for getting rich quickly,” he said. Without decentralized governance, a project risks being treated as a regulated financial service, which can stifle innovation and growth.
This sentiment is echoed by other industry leaders. Marc Boiron, CEO of Polygon Labs, wrote in an opinion piece for Cointelegraph that inflationary emissions only create “temporary illusions of success.” Ethereum co-founder Vitalik Buterin has also argued that DeFi’s real value lies in redistributing risk rather than simply generating returns on fiat-backed assets.
Shifting Market Dynamics
The market dynamics have shifted, with speculative attention now gravitating toward meme coins rather than DeFi tokens. “All the speculative premiums were stolen away by meme coins,” Egorov noted. This shift makes it harder to attract “mercenary capital” that moves quickly between protocols in search of the highest yield.
Moreover, the structure of the market has changed. Retail traders have increasingly moved toward perpetual futures markets, while institutional participants are accumulating spot assets. DefiLlama data shows that perpetual futures volume reached $1.37 trillion in October 2025, reflecting a growing interest in derivatives trading.
Looking Forward
For DeFi to thrive in this new environment, protocols must compete on revenue generation and capital efficiency rather than headline APYs. Egorov believes that durable onchain businesses will need to focus on creating real economic value and ensuring the long-term safety and stability of their platforms.
“If a token is not doing something, maybe it’s better for you to not do a token at all,” he concluded. As the DeFi ecosystem continues to mature, the emphasis on sustainable, revenue-driven models will be crucial for its long-term success and resilience.”
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