Will the DeFi incentive bubble burst by 2026? The key lies in these three issues

[CryptoWorld] Can Incentive Subsidies Really Retain Users? Recently, someone discussed an interesting phenomenon: why do so many DeFi protocols lose users immediately after stopping subsidies?

The root cause is actually quite painful—TVL growth during the incentive period looks impressive, but in reality, it’s just money spent to inflate numbers. The locked funds are essentially attracted by subsidies and do not reflect genuine user demand. Once the subsidies end, the true risk-adjusted returns become apparent, and users naturally choose to exit.

Imagine the “leasing” logic of DeFi liquidity: first, the protocol compensates for risk through high token emissions to attract funds; second, incentives gradually decrease, revealing the real yield figures; third, investors reassess cost versus benefit and withdraw en masse. Throughout this process, the collapse of retention rates is no coincidence.

Where is the real problem? Incentives mask the structural flaws of DeFi itself. For example, impermanent loss risk remains unresolved, yields are essentially marketing expenses of the protocol rather than real income, user demand is highly artificial, and interaction costs are still particularly high.

So what kind of DeFi protocols can survive longer? Their economic models must remain viable even after normalization of incentives. Specifically, they need to truly address impermanent loss and principal risk, ensuring yields come from ecosystem demand rather than token inflation, and expand the ecosystem to broaden revenue sources.

In the long run, DeFi projects should be evaluated based on sustainable income, capital efficiency, and risk-adjusted real returns, rather than who offers the most aggressive incentives. That’s the key to surviving beyond 2026.