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Web3 and DeFi: The Future of Savings and Investment?

Web3 and DeFi: The Future of Savings and Investment?

May 10, 2025

At Lorry Capital, we closely monitor these trends and believe Web3 represents not just the future—but the present—of global finance.

Why Are People Turning to DeFi?

Traditional savings accounts currently offer modest returns, typically between 0.5% and 3% annually. Even "high-yield" accounts or money market funds rarely exceed 4–5% per year. In contrast, DeFi platforms routinely offer yields from 5% to 12% annually on stablecoins—digital assets pegged to traditional currencies like the USD.

DeFi achieves these higher yields by eliminating intermediaries and automating processes through smart contracts, drastically reducing overhead and allowing depositors to capture more profit traditionally reserved for banks.

Real-World Yield Comparison

  • Bank Savings Account: ~0.5–2% APY

  • Bank Fixed Deposit (12-month): ~2–4% APY

  • Money Market Fund: ~4–5% APY

  • DeFi Lending (Stablecoins): ~5–8% APY (Aave, Compound)

  • Liquidity Pools (Stablecoins): ~8–12% APY (Curve Finance, Uniswap)

These figures clearly illustrate why investors are increasingly diversifying their portfolios with DeFi solutions.

Innovative DeFi Protocols Shaping the Future

Several DeFi protocols exemplify this innovation:

  • Gearbox Protocol introduces composable leverage through Credit Accounts, enabling users to leverage their positions across multiple DeFi platforms like Uniswap and Curve, significantly improving capital efficiency.

  • Aave, a decentralized liquidity platform, allows users to earn interest on deposits and borrow against assets with flexible interest rate options, significantly expanding opportunities for efficient capital use.

  • Ethena offers a novel synthetic dollar (USDe), leveraging delta-neutral strategies and integration with other DeFi platforms, providing a scalable and secure digital dollar alternative.

  • Pendle Finance empowers investors by tokenizing future yield, separating principal from yield, and enabling innovative yield trading strategies. This provides greater flexibility and enhances returns for yield-focused investors.

Risks to Consider

Higher returns inherently carry additional risks:

  • Smart Contract Risk: Vulnerabilities or hacks in code can lead to losses.
  • Regulatory Uncertainty: Legal clarity around DeFi varies globally, potentially creating compliance challenges.
  • Market and Peg Risks: Even stablecoins can lose their peg under extreme conditions, as seen with TerraUSD (UST) in 2022.

However, ongoing improvements in security audits, insurance solutions, and clearer regulations are making DeFi increasingly safe and reliable.

Is DeFi Suitable for Traditional Investors?

DeFi doesn't aim to replace banks entirely; it provides additional tools for diversification and financial optimization. For traditional investors comfortable with moderate risk, DeFi offers significantly higher yields and greater financial autonomy. Conservative investors can adopt a balanced approach—combining traditional bank deposits with DeFi exposure—to optimize returns while controlling risks.

The Global Impact

DeFi’s global and permissionless nature is particularly transformative in regions struggling with high inflation, weak banking infrastructure, or restrictive capital controls. Platforms like Ethena and Aave deliver unprecedented financial access and stability, enabling wealth preservation and growth beyond traditional banking systems.

Looking Ahead: Hybrid Solutions

At Lorry Capital, we foresee a growing integration of traditional finance with DeFi. Banks and fintech companies are already exploring hybrid models, embedding DeFi yields into intuitive, user-friendly interfaces.

As Web3 continues to evolve, these innovations promise lower barriers to entry, enhanced security, and broader accessibility to DeFi’s benefits.

The Bottom Line

DeFi represents a fundamental shift in global savings and investment strategies. While traditional banking remains vital, DeFi is swiftly becoming essential for a diversified and modern financial portfolio.

Lorry Capital remains committed to embracing these innovations, strategically guiding our partners and clients through the evolving landscape of Web3 finance.