The following is a guest article from Mike Wasyl, CEO at Bracket.

Let’s be real, DeFi has been a rollercoaster. Over the past four years, we’ve seen some truly awful economic models crash and burn. But even with the failures, there’s something undeniably captivating about this idea of a tarpless economy. If you look beyond the hype, the scams, and the endless crypto jargon, you’ll see a 24/7 market emerging. This market is creating real opportunities, especially for younger generations who can’t rely on old-school pensions – sorry, no gold watch after 30 years of scooping ice cream for Gen Z.

All kidding aside, for younger generations, getting involved in this new financial landscape wasn’t really a choice – it’s what we’ve got. Think about your traditional brokerage account. Sure, the interface is sleek, built by some giant corporation. But underneath that pretty screen, we’re basically strapped into an old, clunky system running on technology from ages ago. I don’t want to be stuck on that outdated ride, with its old-fashioned finance jargon. There are new options now, cutting-edge tools that are modernizing the financial experience, letting us earn on our own terms, around the clock. Let’s dive into what this new world looks like and where it might be heading in 2025.

Let’s talk staking. In the crypto world, proof-of-stake networks reward you directly for helping secure the network – that’s “staking.” This is something truly unique to blockchains; you just can’t do this in traditional finance. It’s a revolutionary building block, and it’s ours! Staking paved the way for Liquid Staked Tokens (LSTs). These LSTs are awesome because they let you earn staking rewards without having to deal with the technical hassle of running your own node. Ethereum’s liquid staking scene absolutely exploded in 2024, hitting a massive $70 billion in total value locked (TVL) by the end of the year. Even with Ethereum’s staking rate at just around 3%, those sweet passive block rewards drew in tons of holders.

Even though Ethereum dominates the staking game in terms of value, only about ~28% of all ETH is actually being staked. We think this is going to jump up to 40-50% in the next few years, and 2025 is going to be key for bringing in big institutional money. Already, over half of institutions holding Ethereum are using liquid staking tokens (LSTs), and they get the appeal of assets that generate rewards. As more players from traditional finance jump into the on-chain world, LSTs are going to become even more popular. However, with all this growth, the competition for staking rewards is going to get fierce. It’s going to be up to users and investors to figure out the smartest ways to stack yields and get the most out of their crypto assets.

As staking becomes more competitive, and yields start to tighten, stakers are going to be on the hunt for new ways to boost their earnings beyond just basic block rewards. But finding those opportunities is tough because liquidity is scattered across different DeFi protocols and blockchains. Once your ETH is staked in a DeFi pool, it’s often stuck there like a rock, until the yields dry up or something better comes along. It’s not very efficient or flexible, which pushes people to chase after airdrops and those crazy high-inflationary rewards in the meantime.

Take Ether.fi, for example. They’re a huge name in the ETH restaking world and dominate over 50% of the liquid restaking market. They let you restake your ETH across platforms like EigenLayer. “Restaking” is basically taking those LSTs that are just sitting there and turning them into Liquid Restaking Tokens (LRTs). The goal is to earn even more yield by using ETH’s security to support other services, and getting rewarded for it. Right now, a lot of these extra rewards are things like loyalty points, tokens, and other incentives designed to keep users engaged. As more services start using restaking for security, we’ll need to see if there’s enough real yield to keep up with the billions of dollars looking for passive on-chain earnings.

What users really want are products that are flexible, easy to use on the go, that keep earning rewards, and that you can stack together. But in DeFi, the way protocols are built just hasn’t caught up with what users want. Simply repurposing the same economic security over and over is risky and puts pressure on Ethereum. Most platforms still see staking as a pretty basic thing – deposit ETH, get rewards, end of story. This creates a cycle where capital just keeps going around and around within the reward system, what we at Bracket call the “ouroboros.” It’s like the money never really leaves DeFi.

But really, users are craving products that offer exposure to a variety of different asset classes, and that are “set it and forget it” simple. We need to get rid of the complexity and build products that are transparent and focus on earning, but with some extra safety built in. If product developers ignore this shift, they’re going to leave yield-seekers stuck in that endless inflationary rewards cycle.

The Playbook for 2025 – Focusing on Real-Yield Optimization and Smart Strategy Management

DeFi is all about “money-legos,” building blocks that you can combine in amazing ways. It’s something traditional finance has always struggled with because banks and brokerages are stuck with those siloed, old systems we were talking about. But DeFi has unlocked the power to layer high-quality on-chain assets to really boost yields. Imagine the ideal setup: a digital “yield stack.” This would combine passive staking rewards with real trading profits, plus real-world assets, and smart economic incentives, all working together to create solid returns without ever leaving the on-chain ecosystem.

Think about it: if you could use products from places like Lido, Coinbase, and Binance, alongside real-world assets, all within DeFi. Users wouldn’t have to just pick one option and stick with it. Their assets could be automatically moved around to the best opportunities, all while managing risk based on their comfort level.

2025 is shaping up to be huge. We’re going to see a wave of fresh talent, new and innovative products, and most importantly, a real change in how people view high-quality crypto assets. For the first time, governments and major investors are starting to see staking assets, ETH, and stablecoins as legitimate. We’re even seeing tokenized traditional finance products popping up – things like on-chain money market funds, credit funds, and models that bridge the gap between on-chain and off-chain finance.

Bringing these yield-generating assets into the picture, along with a more favorable regulatory environment, could unleash a flood of new capital into DeFi. This is exactly what DeFi needs to break free from that ouroboros loop and become a real player in the global economy. These shifts are going to push DeFi to build the tools and infrastructure needed to handle the trillions of dollars that are waiting to move at the speed of crypto.

There’s still a huge knowledge gap we need to bridge though. DeFi developers don’t always get traditional finance, traditional finance folks don’t understand on-chain development, and regulators… well, they’re still figuring things out. This is where experienced DeFi builders can really step up and guide the next evolution of global finance – but we need to work together. We’re on the verge of making all tokenized markets operate 24/7, giving users incredible choices among competitive products and services. In 2025, the most exciting place to be is building the infrastructure that connects these products and DeFi experts to real economic value – think of it as creating some seriously fun new financial rides.

The Bottom Line

The fact that real yields in DeFi have stalled highlights the need for fresh assets, better management, and easier ways to access tokenized products and combined on/off-chain experiences. Users are tired of being trapped in old systems that don’t work for them anymore. Institutions are getting the picture and starting to trust these new types of crypto assets. And with new regulations coming, we should see a surge of innovative competitors looking to get ahead, which is great news for users like us.

DeFi is at a turning point. Its long-term success depends on it growing beyond simple, outdated reward systems and those isolated yield battles where everyone’s fighting each other. We can only recycle the same capital for so long before the whole thing gets boring for everyone. Generating yield needs to become a dynamic, adaptable process – one that uses automation (maybe even AI) and pulls in diverse income streams from asset classes that move at the speed of the blockchain.

If we don’t unlock access to new assets and new uses on-chain, DeFi risks turning into a zero-sum game. Money comes in, but real returns stay flat, and we just end up going in circles. Traditional finance is already tokenizing yield-generating products with big institutional backing, and DeFi has the potential to step up and create the new infrastructure and experiences – the “new rides and rails” – in 2025.

So, DeFi builders, it’s time to realize we’re not going to win by fighting each other. Constantly competing for the same pool of capital is just draining. It’s time to build those new experiences and infrastructure to bring trillions of dollars of financial assets on-chain and finally deliver on the promise of a more level playing field.