Real Yield
Real yield is the return left after accounting for token inflation, dilution and costs. In DeFi the term usually means yield paid out of a protocol's actual revenue, such as trading fees, rather than out of newly issued tokens.
Two ways a protocol can pay you
A protocol can reward users with newly minted tokens. That costs the protocol nothing in cash, but it increases supply and dilutes every holder, so part of the yield is effectively paid by other token holders. Alternatively, it can distribute revenue it actually earns, such as trading fees, borrowing interest or liquidation fees, often in ETH or stablecoins.
The second kind is what DeFi calls real yield. The term spread around 2022, when many emission-funded yields collapsed along with their reward tokens and users started asking where returns really came from.
A worked example
Say a staking pool advertises 20% APY. Looking closer, 15 percentage points are paid in the protocol's own token from new issuance, which grows that token's supply by 15% a year, and 5 points come from trading fees paid in stablecoins. The fee portion is real yield. The emission portion mostly offsets the dilution it causes, and its value depends on what the token is worth when you sell it.
Adjusting for inflation and costs
In the broader sense, real yield also means subtracting everything that eats the headline number: the token's supply inflation, protocol fees, gas costs and, for some, the inflation rate of the currency you measure in. A 4% staking reward on a network whose supply grows by 3% a year leaves stakers about 1% better off in terms of their share of the network.
Pitfalls
Revenue can shrink. Trading fees depend on volume, which can fall sharply in quiet markets, so real yield is not fixed or guaranteed. Some projects use the label as marketing while still relying mainly on emissions. And revenue-based yield still carries smart contract, platform and market risk. Checking the protocol's revenue against what it pays out, using public on-chain data, is the most reliable test.
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Frequently asked questions
Is real yield always lower than advertised APY?
Usually, because advertised figures often include token emissions. Real yield strips those out, or counts them only net of the dilution they cause.
Does real yield mean no risk?
No. It describes where the money comes from, not how safe it is. Exploits, falling volume and token price drops can still cause losses.
How can I check whether a yield is real?
Compare the protocol's fee revenue with the rewards it distributes, and look at the token's supply growth over time.
Related terms
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