Thread by @ChainLinkGod

Risk-adjusted yields in DeFi have effectively gone negative

It doesn’t make sense to risking your assets for such little yield

The only DeFi yield opportunities with decent sustainable yields have an unacceptable risk profile

I’ll explain why 🧵

Every decision is a risk/reward optimization problem

Only when there’s positive expected value (+EV) does a decision make sense

This logic is why I previously highlighted DeFi yield opportunities but am signaling the opposite now

The risk/reward ratio has changed

DeFi yield was never risk-free, and I’ve always flagged as such

But when yield was orders of magnitude higher and markets were stable / generally in a uptrend, DeFi yield was +EV

These days, yield has been crushed and risk profile is higher than ever

DeFi yields have been crushed for a number of reasons:

- The tokens used to subsidize yield aren’t worth as much now

- Demand for leverage is lower, reducing lending rates

- Market flooded with stablecoins looking for somewhere to park

- Lenders and protocols are blowing up

In parallel, DeFi risks have increased

- Protocols with unsustainable economics that only work when prices go up are imploding

- Insolvent lenders and funds are pulling out their assets, triggering bank runs

- Massive liquidations may cause unproven protocols to go insolvent

We also cannot ignore the macro-economic crisis the world is experiencing right now, which goes far beyond crypto

https://twitter.com/nic__carter/status/1538330893139554304

The +EV thing to do currently with your assets is to withdraw what you can to a hardware wallet

That said, each situation is different and not all yield opportunities are the same

Each opportunity must be analyzed individually

Stay safe out there my frens