DeFi Yield Models
structures for decentralized income generation
DeFi Yield Models define how decentralized finance protocols create and distribute income to participants. These models vary widelyÔÇöranging from liquidity mining and protocol fees to real-world revenue and rebasing mechanisms. Each model carries distinct risk profiles, sustainability timelines, and economic signals that affect user behavior, capital inflow, and protocol longevity. Understanding these yield models is crucial for assessing whether income is speculative, inflationary, utility-driven, or revenue-backed.
Use Case: An investor compares a high-APR farm that issues emissions from a reward pool with a staking pool that yields a share of protocol transaction fees. By understanding DeFi Yield Models, they can distinguish between speculative APR and sustainable income streams.
Key Concepts:
- Value-Backed Yield ÔÇö Income derived from protocol usage or revenue.
- Speculative Alpha ÔÇö Yield generated from token inflation or hype cycles.
- Real Yield Targeting ÔÇö Models focused on long-term, revenue-sourced returns.
- Emission Fallout Resilience ÔÇö How protocols survive post-reward phase.
- Rotation-Compatible Yield ÔÇö Yield structures designed for capital cycling.
Summary: DeFi Yield Models reveal the true foundation of income in Web3. Whether driven by hype or grounded in utility, each structure informs risk, sustainability, and capital deployment. Mastery of these models helps users filter between short-term gains and long-term digital wealth systems.
| Model Type | Yield Source | Sustainability | Best Fit For |
|---|---|---|---|
| Value-Backed Yield | Protocol Revenue | High | Long-Term Investors |
| Speculative Alpha | Token Emissions | Low | Short-Term Yield Farmers |
| Real Yield Targeting | On-Chain Usage | Medium to High | Sustainable DeFi Platforms |
| Emission Fallout Resilience | Post-Emission Mechanisms | Essential for Survival | Protocols Exiting Reward Phase |