Liquidations don’t just collapse prices, they obliterate yields.
In DeFi, yield is reflexive: built on feedback loops of leverage, momentum, and risk appetite. When that loop reverses, yields crash toward zero.
We saw it in the unwind: lending demand evaporated, APYs cratered, incentives dried up.
That’s why the next generation of stablecoins and on-chain dollar assets must anchor yield externally to cash flows not tied to crypto cycles.
Think basis spreads, delta-neutral hedges, or real-world cash flows.
Because when markets deleverage, only yields rooted outside reflexivity survive.