Fed Rate Cut and DeFi Growth: Will the "Summer of Yields" Repeat?
Date: 2025-10-02 Author: Henry Casey Categories: BUSINESS
Aave founder Stani Kulechov noted at the Token2049 conference in Singapore that the expected Federal Reserve rate cut could trigger a new cycle of yield growth in DeFi. According to him, a similar process occurred in 2020 during the pandemic, when near-zero rates triggered the so-called "DeFi Summer."
The mechanism is simple: when loans in the traditional system become cheaper, fixed-rate instruments in the US market offer investors lower returns. However, yields in DeFi are directly determined by the balance of supply and demand and are often significantly higher than traditional rates. For example, on the Aave platform, as of October 1, some dollar-pegged stablecoins were yielding up to 12% per annum. By comparison, the US interbank rate is around 4%, and the yield on consumer checking accounts is only 0.07%.
Aave isn't the only player in this segment. There are hundreds of lending protocols operating on various blockchain networks. Among the largest are Morpho, JustLend, Kamino, Compound, and SparkLend, which is associated with the issuer of the stablecoin DAI.
If the Fed does indeed lower rates, and crypto lending rates remain flat or continue to rise, this could stimulate capital inflows into the sector. This scenario could bring institutional investors and large players back into the market, increasing interest in crypto lending. Kulechov emphasized that the DeFi infrastructure has matured in recent years and is ready to integrate into the global financial ecosystem, offering new models for income distribution.
Stablecoins are particularly important in the development of DeFi, as they are most often used for lending secured by assets such as Bitcoin and Ethereum. Moreover, the higher yields offered by decentralized protocols are already sparking discussions about the potential flow of capital from traditional banks to blockchain projects.
Financial institutions are not standing idle. Some banks are launching their own products in the DeFi market. For example, France's Societe Generale has introduced the EUR CoinVertible (EURCV) and USD CoinVertible (USDCV) stablecoins, which can be used for cryptocurrency-secured loans. This demonstrates the gradual convergence of the traditional and decentralized financial systems.
Therefore, the upcoming Fed decision could be a key factor in the future of DeFi. If rate cuts lead to a new wave of investor interest, the market will have a chance to repeat the 2020 scenario and experience another period of rapid growth.
