The evolution of decentralized finance (DeFi) has seen significant developments from its early days, with the creation of decentralized stablecoins and liquidity provider (LP) tokens serving as the foundational "money Legos" for DeFi innovation. These components paved the way for DeFi 2.0, which seeks to address liquidity issues and improve incentive mechanisms. Early DeFi protocols like Uniswap, Aave, and MakerDAO established crucial financial services in a decentralized manner, removing intermediaries and enhancing transparency. As DeFi projects evolved, liquidity mining became a key mechanism for initiating liquidity, though it faced challenges of sustainability and token dilution. DeFi 2.0 emerged with solutions like OlympusDAO’s bonding mechanism and Tokemak’s Reactor model, which aim to ensure long-term, sustainable liquidity by altering traditional incentive structures. Additionally, decentralized oracles like Chainlink play a vital role by providing necessary off-chain data and computation services to support smart contracts. This continuous innovation in DeFi not only enhances user experience and security but also contributes to the broader ecosystem of decentralized finance by creating new financial paradigms and expanding the use of blockchain technology.