Is a Fair DeFi Yield 12.5%? If So, Then Why Has the Market Settled on 3-8%

Description

After $606 million in DeFi exploits in a single month, how should lenders actually be pricing the risk they're taking? Tom Dunleavy of Varys Capital and Adrian Cachinero Vasiljevic of Steakhouse Financial walk through the risk premiums that most DeFi depositors never see in the yield they accept: code exploits, oracle manipulation, governance and social-layer failures, exotic rehypothecation risk, and the model uncertainty that blew up Long-Term Capital Management. Tom's bottom line: a fair blended DeFi yield is around 12.5%. Adrian's response: the answer depends entirely on which primitive, which collateral, and which model you're applying. Guests: Tom Dunleavy @dunleavy89, Head of Venture at Varys Capital; Adrian Cachinero Vasiljevic @adcv_, Co-Founder at Steakhouse Financial. Host: Laura Shin @laurashin. This clip is from a longer conversation on whether DeFi lending yields adequately compensate depositors for tail risk. Full episode here: https://youtube.com/live/VOR1TNyh_vQ We go live every Monday andn Thursday — subscribe to catch it live. Coinbase One 20% off first year of annual plan + $50 Bitcoin bonus. Offer valid until May 31. coinbase.com/unchained Timestamps 🍕 00:00 Why curated DeFi is only 2-5% of the market, and why that matters 📚 01:32 How Tom built the risk premium stack, starting from the risk-free rate 💣 02:30 Technical expected loss: DeFi's 0.5% to 2% annualized default rate 🎭 03:25 Oracle manipulation as a separate attack vector, not a double count 🥸 04:22 Governance and social-layer risk: Drift, Ronin, and everything after 🥷 05:12 Exotic rehypothecation: the risk most of DeFi is taking and not pricing 😰 06:58 The LTCM uncertainty plug: what 12 sigmas still couldn't capture 💥 08:42 Adrian: why loss-given-default in DeFi is almost total ⛓️ 09:43 Why porting a FinTech product onto DeFi fails in a categorically different way _______________________________________________________ #bitcoin #ethereum #crypto #cryptocurrencies ++++++++++++++++++++++++++++++++++++++++++++++++ Subscribe to our channel! Website → https://unchainedcrypto.com Unchained Daily Newsletter (FREE!)→ https://unchainedcrypto.beehiiv.com/subscribe/ Unchained X → https://x.com/unchained_pod Apple → https://podcasts.apple.com/us/podcast/id1123922160?ls=1 Spotify → https://open.spotify.com/show/1cJrrfGY1SKBIRn5noKSAf?si=6SI4qIcRTEO7EhOe0V9n4w RSS Feed → https://feeds.megaphone.fm/LSHML4761942757 Unchained: Your no-hype resource for all things crypto!