Source: Cointelegraph
Original: “Polygon CEO: DeFi Must Abandon Hype for Sustainable Liquidity”
Polygon Labs CEO Marc Boiron has called for a fundamental transformation in liquidity management for decentralized finance (DeFi) protocols, labeling the ongoing liquidity crisis in the sector as “self-inflicted.”
In an exclusive interview, Boiron elaborated on Polygon's vision for sustainable DeFi, emphasizing that “on-chain native liquidity” and “transparent economic models” are the future direction.
Boiron criticized DeFi protocols for offering extremely high annual percentage yields (APY) through token incentives, stating that such strategies have created a vicious cycle of “rented capital.” He told Cointelegraph, “This is just rented liquidity, not true loyalty.” He pointed out that the liquidity generated by these strategies is fleeting; once yields decline or token prices drop, liquidity quickly evaporates. This reliance on short-term hype undermines the stability of the entire industry and deters institutional investors.
Abandoning Hype for DeFi Stability
To break this cycle, Boiron urged protocols to shift their focus from “eye-catching returns” to “pragmatic fundamentals.” He said, “Sustainable DeFi requires liquidity that can be retained for sound reasons.” He cited Polygon's launch of the POL token as a blueprint for achieving this goal. “Protocols can generate returns from their own treasury rather than continuously diluting token value. In the long run, this approach can strengthen the treasury rather than just paying temporary liquidity providers.”
At the core of Polygon's strategy is on-chain native liquidity, meaning protocols directly hold liquidity positions by building their own treasury, rather than relying on external providers. Boiron noted that unlike the method of quickly attracting liquidity through token incentives that dilutes token value, native liquidity can provide long-term stability and capital efficiency.
Boiron stated that the only cost of this model is “time.” He explained that establishing a treasury through fee recovery, bond mechanisms, or limited issuance requires patience and disciplined management.
Polygon Prepares to Bring Traditional Finance into the Crypto World
For traditional finance (TradFi), the stability and predictability of liquidity are prerequisites for the widespread adoption of DeFi. Boiron stated, “Traditional finance relies on stable and reliable market access models. If a DeFi protocol's liquidity suddenly disappears or slippage rises sharply, it poses risks that institutions find unacceptable.”
However, he also pointed out that Polygon's solutions—including sustainable treasury management, native liquidity, and transparent economic models—are not only applicable to institutional users. He remarked, “These are good financial fundamentals applicable to any protocol.” He also denied claims that Polygon's strategy is too narrow to address broader issues in DeFi.
Building a Scalable Blueprint for On-Chain Native Liquidity
As Polygon pushes for a “restart” of DeFi, Boiron is optimistic about the positive shifts from frameworks like the European Markets in Crypto-Assets Regulation (MiCA) and U.S. regulations. He predicted, “In the next 12 to 18 months, we will see more institutional participation.”
Looking ahead to 2026, Boiron hopes to see a more stable DeFi ecosystem characterized by reduced volatility, stronger community governance, and the ability to bridge TradFi with real-world assets through complex financial products. He stated that Polygon (POL) is expected to reduce reliance on “rented capital” and promote true decentralization.
He added that POL is foundational for achieving long-term growth, as it allows protocols to focus on creating higher-quality products and enhancing user engagement, rather than scrambling to fill liquidity gaps or prevent token devaluation: “POL does not solve all problems, but it provides protocols with breathing room to address larger challenges in the right way, such as user retention and capital inflow.”
Boiron's core advice to DeFi protocols is clear: sustainable economic models will ultimately prevail.
Although market pressures may tempt projects to chase high yields, he noted that protocols that have survived past cycles have proven the value of sustainability. “Now, more and more teams are beginning to realize this.” He called for the entire ecosystem to adopt a model that emphasizes long-term growth rather than indulging in fleeting hype.
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