DeFi yields are compressing. The main reason – less demand for leverage.

Back in 2024, ETF flows and election narratives pushed traders to borrow aggressively, driving Aave USDC rates above 10% and putting DeFi well above the Fed.

Now supply has doubled, but demand is more distributed and less aggressive, so rates normalized back toward TradFi. DeFi is now a live price of leverage demand, and that demand is simply not there.
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