DWF Labs Head Andrei Grachev Points Out That No-Risk Returns in DeFi Do Not Exist
Andrei Grachev, head of DWF Labs, stated that the current situation in DeFi clearly shows that no returns can truly be risk-free.
He emphasized that while DeFi as a technology can significantly enhance trading efficiency, high returns cannot be sustained in the long term, as these returns primarily rely on short-term mechanisms driven by airdrops, leveraged cycles, and sponsorship incentives, rather than sustainable infrastructure returns. This statement comes after several recent cross-chain and restaking incidents, further highlighting the market's reassessment of the authenticity of DeFi yields.
Source: Public Information
ABAB AI Insight
Andrei Grachev's judgment directly touches on the underlying mechanisms of DeFi yields. High returns superficially stem from protocol incentives and liquidity mining, but essentially are achieved through airdrop expectations, leveraged borrowing cycles, and short-term subsidies from project parties. These tools temporarily enhance TVL and user stickiness but fail to create real economic value. Once incentives end or market volatility triggers liquidations, returns quickly drop to zero and amplify systemic losses. This structure sharply contrasts with the risk-return matching logic in traditional finance.
From a capital allocation perspective, the early growth of DeFi heavily relied on incentive-driven liquidity wars, leading to a concentration of capital in high APR projects while neglecting sustainability and risk isolation. Leveraged cycle strategies amplify returns in bull markets but accelerate bad debt spread in bear markets or under event shocks, as exposed by recent bridge incidents like Kelp DAO. Grachev's viewpoint reflects that professional market participants are shifting from pursuing short-term TVL to assessing long-term infrastructure efficiency, with capital gradually migrating from subsidy-dependent protocols to projects with real trading demand and settlement optimization.
Structurally, such statements accelerate DeFi's convergence from an experimental high-yield phase to institutional efficiency tools. The core value of DeFi lies in reducing trading friction and enhancing capital utilization, rather than creating an illusion of risk-free returns. Once the incentive bubble bursts, the remaining protocols will need to prove their pricing power through real use cases, reshaping the distribution of wealth between protocol and user layers, and pushing the industry to find a more stable balance between composability and risk control.