When you deposit money into a savings account in traditional finance, you can typically expect a reliable return on investment (ROI) due to the trust associated with banks. Banks have consumer protections and years of experience navigating volatile markets, which instills confidence in investors.
However, decentralized finance (DeFi) platforms lack this level of trust. Most decentralized exchanges (DEXs) do not have the same experience or track record as traditional financial institutions, making it more challenging for investors to feel confident in providing liquidity to these platforms.
DeFi platforms have the potential to revolutionize the financial industry, but they still have a long way to go in terms of gaining the trust and confidence of investors. As the DeFi space continues to evolve and mature, it will be interesting to see how these platforms address the issue of capturing value from liquidity more effectively.
