DeFi Yields vs Traditional Savings Rates

DeFi protocols promised 5-20% stablecoin yields, far outpacing bank savings rates of 4-5%, but the Terra/Luna, Celsius, and BlockFi collapses revealed that unsustainably high yields masked catastrophic counterparty risk. These DeFi yields were 3x higher than the average high-yield savings account's 4.5% APY, yet 2022 data shows 92% of protocols offering >15% yields collapsed within 18 months—a failure rate far exceeding traditional bank failures. The trade-off between high returns and principal safety remains polarizing.