DeFi 2.0 is a movement of projects improving on the problems of DeFi 1.0.
In most cases, tokens staked in liquidity pools can't be used anywhere else, creating capital inefficiency.
Impermanent loss insurance If you invest in a liquidity pool and start liquidity mining, any change in the price ratio of the two tokens you locked may lead to financial losses.
This process is known as impermanent loss, but new DeFi 2.0 protocols are exploring new methods to mitigate this risk.
We've seen success in new ways to reduce risk and earn APY, but we'll have to wait and see if DeFi 2.0 fully delivers on its promises.
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Source - https://academy.binance.com/en/articles/what-is-defi-2-0-and-why-does-it-matter?utm_source=BinanceAcademy&utm_medium=Social&utm_campaign=Article

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