DeFi is facing critical issues due to its reliance on unsustainable growth models driven by token emissions, leading to a cycle of temporary success followed by liquidity withdrawal. The current yield model is flawed due to inflationary emissions that dilute token value, capital flight dominated by mercenary capital, and misaligned incentives that prevent the building of sustainable treasuries. To overcome these challenges, protocols should transition to regenerative economic models such as protocol-owned liquidity, allowing them to maintain capital stability and generate consistent revenue. Another viable solution is to stake bridged assets for yield, effectively utilizing otherwise stagnant assets. For DeFi to mature, there needs to be a shift towards real yield generated from actual revenues rather than from mere token inflation, requiring efforts from investors, builders, and users alike to foster long-term growth and sustainability. The evolution of this model is crucial to breaking the boom-and-bust cycle and establishing lasting credibility in the space.

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