Where DeFi yield comes from

DeFi yield is paid by someone: traders through fees, borrowers through interest, or the network through staking rewards.

What it means

Very high APYs often come from newly created reward tokens, so when the price of those tokens falls, the yield is worth much less than the APY shown.

What to watch

Which part of the APY comes from fees, interest or staking and which part from reward tokens, how the reward token's price moves, and whether the source is shown at all.

How Compass-Alpha uses it

Background only; not used in any figure on Compass-Alpha.