DeFi yields are crashing so hard that they can't compete with a traditional savings account

DeFi yields have collapsed below TradFi rates, forcing investors to face higher smart contract risks for lower returns as regulation and exploits mount. What to know : Flagship DeFi rates have fallen below traditional finance (TradFi), with Aave’s 2.61% APY on USDC trailing the 3.14% offered by Interactive Brokers. Investors are absorbing high risks—including a $2.47 billion spike in 2025 exploits—for returns that no longer offer a "risk premium" over "risk-free" government rates. Organic on-chain yield has dried up; the remaining competitive rates (3.5%–6%) now largely depend on Real-World Assets like U.S. Treasuries and institutional credit.