2025-12-29 12:20:45

Looking at the most active trading pairs on recent DEXs, you can see what DeFi is really up to.

The trading pairs of ETH and stETH are the hottest, and the exchange of various stablecoins is also a major trading volume driver. The underlying logic is simple—arbitrage.

Check out the data from the leading lending protocols Aave and Morpho, and you'll understand. The funds on these platforms mainly flow into three directions:

First is arbitrage between ETH and its derivatives. LSTs (liquid staking tokens), LRTs (liquidity re-staking tokens), these are essentially people playing the "maturity arbitrage" game with ETH, flipping products with different maturities and yields.

Second is the circular lending of stablecoins. Borrow one stablecoin, swap to another, borrow and swap again, making profits from interest rate differences.

Third is leveraged trading, which needs no further explanation.

In short, arbitrage is the core engine driving DeFi liquidity.

ETH-0.15%

STETH-0.14%

AAVE-2.04%

MORPHO-0.12%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

7 Likes

Reward
7
6
Repost
Share

Comment

0/400

SmartContractPhobia

· 5h ago

Arbitrage, arbitrage, arbitrage. I've been hearing about it for a year. When will there be some real applications? DeFi is now just a playground for bots and whales. retail investors are still here researching yields. So, LSTs and LRTs are just to make the money cycle a few more times; essentially, it's still a zero-sum game. When will the profit from stablecoin spreads be worth the effort? It's exhausting. It would be great if it were productive; right now, it's all just pure financial games.

View OriginalReply0

HalfBuddhaMoney

· 5h ago

Damn, isn't this just saying that DeFi has become an arbitrage machine? The stablecoin circular lending scheme, isn't it just moving funds around in your own hands? Where's the real liquidity? Names like LST and LRT sound fancy, but they're still just extracting ETH yield spread. The logic is sound, but the barrier to entry in this game is really high. Looks like I need to study Morpho's interest spread; maybe there's some profit to be found. DeFi really has no innovation anymore, just old-school arbitrage and complexity competitions. I've seen this logic many times before. The current problem is that large players monopolize the interest spread space, and retail investors trying to copy often end up losing money. The question is, with so much liquidity, who is actually making money?

View OriginalReply0

MEVHunterBearish

· 5h ago

Arbitrage machines are running loudly, and we're all dancing inside. Honestly, I'm tired of the stablecoin strategies long ago, just waiting for someone to crash this game. LST stacking LST stacking LRT, nested layer after layer, and it's really hard to tell who will end up holding the bag. This is DeFi—essentially a battle of robots harvesting from robots. When Morpho data came out, I knew right away—it’s those big players frantically trading again. Liquidity looks abundant, but it’s actually a false prosperity built on profit margin arbitrage. Wake up early; only a few top players truly make money.

View OriginalReply0

GhostWalletSleuth

· 5h ago

Arbitrage, arbitrage, or just arbitrage—DeFi has nothing else to offer --- That stETH mess, honestly, is just funds circulating around --- Looking at Morpho data, oh my, it's all arbitrage bots executing trades --- Borrowed stablecoins back and forth, this round is purely a numbers game --- LST, LRT sound fancy, but in reality, it's just the same ETH being peeled multiple layers --- Leverage trading, I just lol—this is the real bloodsucking game --- High liquidity? Impossible, that's just an illusion of arbitrage --- After looking at DEX trading pairs for a while, I realize I'm the one caught in the trap --- The interest spread in lending protocols has been played out long ago --- To put it simply, money is just circulating between a few protocols—does anyone not know who's making money?

View OriginalReply0

WagmiOrRekt

· 5h ago

Basically, it's a bunch of people playing arbitrage games, and the real users have long since left. That bunch of LST stuff is essentially a game of digital hot potato; it will collapse sooner or later. Stablecoin circular lending— isn't that risk-free arbitrage? I don't understand why it hasn't been wiped out. DeFi now relies on this arbitrage engine to sustain itself, drifting further away from genuine financial applications. Borrowing and swapping back and forth, it's no different from a casino; big players are there harvesting profits.

View OriginalReply0

MoonRocketTeam

· 5h ago

You're still playing the arbitrage game, DeFi is just a big nested doll, layer after layer of interest rate differences. This wave launch window is okay, but the booster is burning quite fiercely. Everyone needs to control their positions well. I've seen through stablecoins long ago; it's just a game of borrowing and re-borrowing, dopamine rush for a moment of pleasure. LSTs, LRTs, to put it simply, are just shells for maturity arbitrage; essentially, they're still playing the ETH game. I dare not touch leveraged trading; one careless move could directly burn the track. So, the real core engine behind the trading volume on DEXs is these arbitrageurs—they are the true liquidity providers. Everyone is flipping interest rate differences in Aave and Morpho, no wonder these two leading lending platforms remain popular. It feels like this arbitrage cycle is nearing its peak. I suggest all astronauts prepare a stop-loss plan.

View OriginalReply0