According to a report by Cointelegraph on April 25, Marc Boiron, CEO of Polygon Labs, called for a fundamental shift in liquidity management for Decentralized Finance (DeFi) protocols. He stated that the current liquidity crisis in DeFi is “self-inflicted.”
Boiron emphasized that DeFi protocols should stop providing high annual percentage yields (APY) through token emissions and instead adopt on-chain self-sustaining liquidity and transparent economic models. He pointed out that the current high-yield strategies are just “renting liquidity,” and once the yields decline or token prices fluctuate, that liquidity will quickly disappear.
Boiron expects that more institutions will participate in the DeFi ecosystem in the next 12-18 months. He stated that the POL token model of Polygon will help the protocol establish a stable liquidity pool, allowing it to focus on product development and user retention, rather than constantly diluting token value to maintain liquidity.
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