Problems

Non-Backed Yields

The token staking model to receive interest usually has two types:

• High yield -> Non-sustainability -> Ponzi scheme

• Low yield -> Unable to attract cash flow -> Project failure

And, most of these projects have not been able to optimize the cash flow around the ecosystem and have a proper model to maintain that cash flow.

Inflation

Inflation and unsustainable APRs affect the majority of the DeFi space. In the early stages, DeFi protocols attract users with incredibly high APRs, which as the number of stakers grows, starts to decrease, leading to a decline in interest level. These economic models lead to a steady drop in trading volume and high token inflation which cannot be covered. Token devaluation will increase at an extremely high rate.

Nowadays most of the DeFi ecosystems are unsustainable because of their inadequate revenue distribution, which means that even as interest increases they can only generate diminishing returns.

Separate the NFT and DeFi World

NFTs and DeFi World are perceived as separate spheres in the Blockchain ecosystem, with different applications and audiences. The potential of their convergence or the methods of their fusion are less known or understood.

Fluctuating Rewards

Newly launched DEXes almost always offer unsustainable APRs to Liquidity Providers and Stakers, they can cover these APRs due to high trading volume for at least the first few days, but then the declining APRs bring a strain on the system creating very high selling pressure and increased the inflation of the native token.