yield-strategies

Yield paid from cash flow a protocol actually earns (trading fees, lending spreads, real user activity) rather than subsidized by minting more of its own <a href="https://defi-bible.com/en/glossary/governance-tokenomics/governance-token/" target="_blank" rel="noopener">Governance Token</a> — asking whether a <a href="https://crypto-bible.com/en/glossary/defi-basics/stablecoin/" target="_blank" rel="noopener">Stablecoin</a> yield is <a href="https://rwa-bible.com/en/glossary/rwa-fundamentals/real-yield-rwa/" target="_blank" rel="noopener">Real Yield</a> is really just asking one question: where does this money actually come from?

Simultaneously buying a spot asset and shorting an equivalent notional of futures or perpetual contracts, so price moves on both sides cancel out — the return comes from the futures premium and perpetual <a href="https://crypto-bible.com/en/glossary/derivatives-and-leverage/funding-rate/" target="_blank" rel="noopener">Funding Rate</a>, not from betting on the asset's direction. This is what most <a href="/en/glossary/algorithmic/delta-neutral/">Delta-Neutral</a> <a href="https://crypto-bible.com/en/glossary/defi-basics/stablecoin/" target="_blank" rel="noopener">Stablecoin</a> yield mechanisms are actually doing under the hood.

A leveraged strategy that repeats "deposit collateral, borrow another <a href="https://crypto-bible.com/en/glossary/defi-basics/stablecoin/" target="_blank" rel="noopener">Stablecoin</a>, swap back, redeposit" to amplify a smaller underlying interest rate spread into a much higher APY — while equally amplifying <a href="https://crypto-bible.com/en/glossary/derivatives-and-leverage/liquidation/" target="_blank" rel="noopener">Liquidation</a> risk.

<a href="https://crypto-bible.com/en/glossary/defi-basics/stablecoin/" target="_blank">Stablecoin</a> yield strategies are various methods for earning returns while holding stablecoins. The four common approaches are: depositing into DeFi lending protocols (like Aave), holding native yield-bearing stablecoins (like sUSDS, sUSDe), providing DEX liquidity (like Curve), and using centralized exchange fixed deposits or financial products. The yield logic and risk structure behind each method differ significantly — the highest annualized returns often mean the most complex mechanisms or highest risks.

The mechanism DeFi lending protocols like Aave and Compound use to calculate borrow and supply rates in real time, driven by a single input — utilization (the share of total deposits currently borrowed) — through a piecewise linear formula with a kink point that automatically reflects supply and demand.