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DeFi Protocol Mechanics, Decoded
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Yield Strategies

Lead · Yield Strategies

The Real Return on Yield Farming: The Costs High APY Doesn't Show You

A triple-digit APY often has only a single-digit portion coming from real fee income — the rest is the protocol diluting itself with token issuance. What that token is worth six months from now is the real return.
Seeing a triple-digit annual percentage yield (APY) displayed on some pool tends to make most people's eyes light up — but that number often only reflects part of the actual return picture. To judge whether yield farming is genuinely worthwhile, you first need to break down what that APY figure is actually made of, and what costs aren't being counted.What Makes Up an APY FigureMost yield...
"A triple-digit APY often has only a single-digit portion coming from real fee income — the rest is the protocol diluting itself with token issuance. What that token is worth six months from now is the real return."
— DeFi Bible
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