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DeFi in Turmoil as Eye-Popping Yields Prove Too Good to Be True

  • ‘Serious repercussions’ expected as Celsius halts withdrawals
  • This is ‘not a normal market anymore,’ Arca’s Dorman writes
Bloomberg business news
WATCH: Bitcoin dropped 10% Tuesday before paring much of the slide. Ether and Avalanche also trimmed losses.Source: Bloomberg

The notion that the cryptocurrency industry has near-magical powers to pay out yields that dwarf those found in the traditional financial world without much added risk is undergoing a rapid and painful reality check.

Barely a month after the dramatic collapse of the Terra blockchain, whose Anchor protocol enticed investors with annual yields of almost 20%, crypto lender Celsius Networks halted withdrawals and some other transactions on its platform offering similarly eye-popping returns. Those active in the space insist that these are just growing pains for a young industry rather than glaring flaws that reveal profound existential issues, yet the episodes still have the power to shake up the ever-changing world of crypto finance.