Polygon CEO: DeFi Must Prioritize Sustainable Liquidity
29 Apr, 2025 ● Crypto people
Polygon Labs CEO Marc Boiron is advocating for a major change in how decentralized finance (DeFi) protocols handle liquidity, describing the sector’s ongoing liquidity issues as “self-inflicted.”
In an exclusive interview, Boiron shared Polygon’s strategy for building a sustainable DeFi ecosystem, stressing the importance of chain-owned liquidity and transparent economic structures as the way forward.
Boiron criticized DeFi projects for promoting a cycle of “mercenary capital” by offering extremely high annual percentage yields (APYs) through token emissions.
“It’s just renting liquidity; it’s not real loyalty,” he told Cointelegraph, explaining that this practice results in liquidity that quickly disappears when yields decline or token prices fall.
He argued that an overreliance on short-term excitement harms the sector’s stability and discourages institutional players from entering.
To address these issues, Boiron urged DeFi protocols to focus on strong fundamentals rather than chasing high returns.
“Sustainable DeFi needs models where liquidity sticks around for the right reasons,” he said, highlighting Polygon’s POL token as an example of how to achieve this, adding:
“Protocols can put their treasury to work, earning yield instead of diluting token value. Over time, this strengthens the treasury rather than just paying off temporary liquidity providers.”
Polygon’s model emphasizes chain-owned liquidity, encouraging protocols to build their own treasuries and hold liquidity positions directly, rather than depending on external liquidity providers.
Boiron noted that while token emissions can quickly attract liquidity, they ultimately dilute token value, whereas owning liquidity offers long-term resilience and better capital efficiency.
The only significant trade-off in this approach, according to Boiron, is time.
He explained that accumulating a treasury through captured fees, bond mechanisms, or controlled emissions demands patience and careful management.
Boiron noted that for traditional finance (TradFi) institutions, liquidity predictability and stability are essential prerequisites before engaging with DeFi:
“Traditional finance runs on models that need stable, reliable market access. If a DeFi protocol suddenly loses liquidity or slippage spikes, it creates a level of risk most institutions just won’t take.”
However, Boiron clarified that Polygon’s approach — which involves sustainable treasury strategies, liquidity ownership, and transparency — benefits more than just institutional investors.
“These are good financial fundamentals that work for any protocol,” he said, rejecting the idea that Polygon’s efforts are too narrowly focused to solve broader DeFi challenges.
As Polygon continues to push for a reset in the DeFi space, Boiron remains optimistic that regulatory frameworks like Europe’s Markets in Crypto-Assets Regulation (MiCA) and forthcoming U.S. guidance will support this vision.
“We’re 12–18 months away from seeing a lot more institutional involvement,” he predicted.
By 2026, Boiron foresees a more stable DeFi ecosystem, characterized by lower volatility, stronger community governance, and more sophisticated financial products that bridge traditional finance with real-world assets.
He added that Polygon’s POL $0.2451 token is positioned to help move the ecosystem away from reliance on mercenary capital and toward true decentralization.
He emphasized that POL serves as a foundation for sustainable growth, enabling protocols to focus on product development and user engagement instead of constantly battling liquidity shortfalls or diluting tokens:
“POL doesn’t solve everything on its own, but it gives protocols the breathing room to tackle bigger challenges like user retention and capital inflows the right way.”
Boiron’s message to the broader DeFi community is straightforward:
“Sustainable economics always win in the long run.” Although market pressures often tempt projects to chase high yields, Boiron pointed out that protocols that survived previous cycles demonstrate the lasting value of prioritizing sustainability.
“More teams are starting to get it,” he said, encouraging DeFi projects to adopt models that favor steady, long-term growth over short-lived hype.
Sources:
https://cointelegraph.com/news/polygon-ceo-calls-for-sustainable-defi-over-hype-driven-liquidity
