Investing.com – With the Federal Reserve gearing up to cut interest rates, DeFi yields are looking attractive again, according to analysts at Bernstein, who say this could be the catalyst to reboot crypto credit markets.
The Decentralized Finance (DeFi) system helps bootstrap crypto credit markets, where traders can borrow against crypto collateral. In a note dated Monday, Bernstein analysts said DeFi yields were boosted by incentives from application tokens during the 2020-2021 crypto boom.
“For example, if plain vanilla lending USDC stablecoin offered a 3% yield, the free token incentives would juice the yield to 15-20%,” the analysts wrote. However, these high yields were unsustainable, and as interest rates increased in 2022-2023, even standard USD stablecoin yields became less attractive compared to US money market yields.
Now, with the rate cycle turning dovish and a new crypto cycle emerging, there is renewed…
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