Death by a Thousand Pools: How Liquidity Fragmentation Threatens DeFi

Death by a Thousand Pools: How Liquidity Fragmentation Threatens DeFi

The maturation of DeFi technology has created a paradox: while battle-tested codebases and rising technical proficiency have lowered the barrier to entry for launching new protocols, securing sustainable liquidity has never been harder. As thousands of projects built on increasingly standardized infrastructure compete for a finite pool of capital, the ecosystem faces a systemic challenge that threatens genuine innovation and growth.You're readin…

DeFi lending's risky business: can isolated pools contain contagion?

Risk is the carbon monoxide of Web3: all around us and yet invisible. We know it exists, and we face it every day as we saddle up and enter the trenches or prepare to hunt for yield in the DeFi pastures, yet we can’t look it in the eye. All we can do is protect ourselves as best we can and pray it doesn’t find a chink in our armor through which to attack.But while the average DeFi user can do little to halt this silent killer of lending position…