What Is the Concept of a ‘Moat’ in the Context of Decentralized Finance?

A 'moat' in DeFi refers to a sustainable competitive advantage that protects a protocol's long-term revenue and market share from competitors. Examples include strong network effects (dominant user base), high switching costs (e.g. time-locked staking), or superior security/decentralization.

A strong moat is a key factor in intrinsic value, as it justifies a higher long-term growth rate ($g$) and a lower risk premium in the DCF.