Yield Aggregator

• also known as ‘auto-compounder’ or ‘yield optimiser’

• automatically claim & re-invest interest gained

• some manage your fund on a single pool, some aggregator multiple strategies

• best for chains with high gas fee or smaller size investment

Yield Farming

• general yields can be from providing liquidity, lending assets, staking, locking platform token to share protocol fees

• strategies like delta neutral & leverage lending are common in yield farming

  • delta neutral - build a short position for the token to be farmed to prevent token volatility, or deposit holding assets to borrow farm token, given the yield is more than borrowing fee

  • leverage lending - pay borrowing interest to borrowed more than the collaterals to amplify return

Real Yield

• the revenue should be generated from an external & repeatable source, such as service/trading fee

• if token distribution is higher than project's revenue, the token emission may be considered as too high & not sustainable

• pool with unnaturally high APY are generally unsustainable

• tokenomic model varies over projects, the emission changes should be considered when determining if it's a real yield

Advantage vs. traditional financial process

• Decentralised - minimise centralised entities that charge multiple phases of service fees

• Instant - no processing time when switching strategies

• Transparent - can clearly trace how deposited assets are used by the protocol