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- DeFi revenue has declined for four months, driven by lower user activity and reduced market confidence.
- Yield-bearing stablecoins, BTCFi, and RWA projects are emerging as strong performers despite the broader downturn.
The past four months have not been a pleasant one for the DeFi space. Monthly revenues from major protocols have been steadily declining with no sign of recovery. In fact, since its peak in December 2022, the sector’s total value locked (TVL) has dropped by more than 30%.
This sharp decline is not just a number on the screen—it reflects a decline in trust among users who are increasingly reluctant to put their money into DeFi protocols that are perceived as less secure or do not offer attractive returns. Repeated hacks and global economic uncertainty continue to be the main triggers for many to withdraw.
The monthly revenue of DeFi protocols has been on a declining trend for the last 4 months.
This might be attributed to the sluggish wider market.
But there are some exceptions:
🔹Yield Bearing stable coins have been getting more traction and volume.
🔹BTCfi based protocols… pic.twitter.com/sEPeP7a7DA
— Hercules | DeFi (@Hercules_Defi) April 5, 2025
The Rise of Yield-Bearing Stablecoins
However, not all segments of DeFi are the same. Amid declining revenues and shrinking liquidity, stablecoins that offer yields are starting to steal the spotlight. Think of it like putting your money in a savings account, but with higher interest rates than traditional banks—that’s the main attraction.
Annualized returns from stablecoin-based protocols like SUSDE and USDS are even in the double digits. This is quite tempting for users who are tired of volatility but still want consistent returns.
Furthermore, the adoption of yield-bearing stablecoins appears to be expanding as users begin to prioritize stability over wild speculation. In an uncertain economic climate, this approach makes sense. After all, who wants to wake up stressed every morning because their asset value plummeted overnight?
BTCFi Turns Idle Coins Into Workers
On the other hand, something quite surprising comes from the BTCFi sector. Bitcoin used to be considered a passive asset, like digital gold that just sits in your wallet. But now, various protocols have managed to turn it into a productive asset. In just one year, the total locked value in BTCFi has skyrocketed from around $300 million to over $8.6 billion.
Protocols like Stacks, Sovryn, and Rootstock have played a major role in this change. They bring smart contract functionality to Bitcoin, so that this asset can “work” and provide returns.
Smart Protocols Get Smarter With AI
Moving on to another topic that is no less interesting: artificial intelligence is now starting to penetrate the world of DeFi. Protocols like Gauntlet and Chaos Labs have already started using AI to monitor risk and potential liquidations in real-time. This technology is used to allow protocols to automatically adjust parameters based on market conditions, without having to wait for humans to act.
For users, this can provide an added sense of security. Imagine if a lending app could detect danger before it actually happens and take preventive action—that would certainly be more reassuring than waiting for a position to be liquidated in an instant.
RWA Projects Push Into the Spotlight
Meanwhile, the Real World Assets (RWA) segment is beginning to emerge. One player that has emerged is Plume Network, a Layer 2 blockchain specifically designed to support the integration of real-world assets into the crypto ecosystem. From carbon credits to GPUs, everything can be bridged into an Ethereum Virtual Machine (EVM)-based system.
CNF reports that YZi Labs has even invested in Plume Network, indicating their confidence in the future of RWA. When projects like these are able to bring the real world into the crypto ecosystem without sacrificing speed or efficiency, it is possible that this segment will become the new axis of DeFi growth.
