Market-neutral DeFi strategies: managing hack risk, liquidity scarcity and diversification limits

Evgeny Gokhberg, founder and managing partner of Re7 Capital, argues that market-neutral DeFi yield strategies are essential for surviving crypto’s volatility. Re7 — which has deployed roughly $1.2 billion in DeFi liquidity since 2021 — focuses on earning yield without exposure to price direction by converting capital to stablecoins and providing liquidity. Gokhberg highlights that early DeFi offered very high stablecoin yields (up to ~40%), but the sector’s core risk remains platform-level software hacks, largely uncorrelated with traditional markets. He warns that simple diversification is insufficient — DeFi risk resembles repeatedly selling a put option: profits accrue until a catastrophic protocol failure. To manage this, he proposes formalizing attack-vector checklists and assessing three layers of risk (asset, platform, chain). Key facts and views: DeFi annual default rates have fallen from double digits to an estimated 2–5%; TVL has not meaningfully grown since 2021, leaving the sector structurally starved of capital; supply-demand dynamics favor allocators; on-chain trading returns vary widely with market cycles (bull: ~25–30%, bear: ~5–10%); and Re7 targets being flat on the year through diversification and risk controls. Gokhberg also discusses broader market structure: Bitcoin as digital gold, most altcoins facing a cleansing (many may reach zero), convergence of CeFi/DeFi/TradFi, liquidity-driven narratives, and the importance of patience and position sizing. For traders, the takeaway is to prioritise explicit platform-security analysis, avoid overtrading, apply a barbell between established projects and speculative bets, and use benchmarks (eg. ETH) to manage risk.