If You Can’t Explain Yield, You’re the Yield.
Mikey3 min read·Just now--
Decentralized Finance has evolved and has become so easy so much to the point that the average user doesn’t truly know what it means to EARN yield.
To users, it’s presented simply as high APYs on dashboards, simple deposits and earn continuous yield with minimal explanation behind how returns work.
Meanwhile in reality, if you can’t explain exactly where your yield is coming from, you aren’t just the investor- you are the exit liquidity.
High APYs which are usually displayed aren’t eventually what is received in the long run. There’s a distinct difference between displayed yield and real yield.
When you factor in the following:
- Impermanent loss: the cost of providing liquidity in a volatile pair
- Rebalancing costs: Gas fees and slippage incurred when moving assets.
- Execution friction: The tax at various entry and exit points
- Volatility impact.
You can very much understand how significantly a high APY significantly reduces and eventually yields less than seen.
So where does yield actually come from, where is the profit derived from?
Sustainable yield is derived from various sources such as:
- Trading fees- Users paying for the convenience of an immediate swap, for trading and moving assets.
- Lending activity- This refers to borrowers paying interest to leverage their positions.
- Arbitrage.
- Liquidations: Bonuses earned for dissolving a system.
- Incentives/emissions- Marketing spend by a protocol to bootstrap liquidity.
In every trade, there’s a winner and there’s a loser. If you provide liquidity to a pool without truly understanding the system then you’re subsidizing it.
You might be earning ‘incentives’ whereas you’re actually incurring loss in the downside due to volatility.
Going into a trade without modelling the outcome often just leads to a downside for the user.
How are there various outcomes for different users despite following the same protocol?
This all comes down to understanding the system and going for the right option.
Some users simply chase after APYs without truly knowing how the system operates while others analyze their cost, the risk, model the outcome and eventually pick the plausible option than the former.
We are moving away from the era of Yield Chasing and into the era of Yield Engineering.
Rather than simply going after high APYs, t’s about net outcome. It involves modeling expected volatility, managing risk, and optimizing for the long term. It’s about moving toward structured financial products.
This is where Concrete Vaults comes in, Concrete provides the infrastructure to automate the “hard parts” of DeFi.
Concrete Vaults help solve the yield gap by:
Automated Allocation: Moving capital to where it is most efficient.
- Strategic Management: Executing complex rebalancing without manual error.
- Structured Exposure: Moving from guessing to a defined and optimised strategy.
By using concrete, you move from being just a member in the market to being a participant in a structured system.
Yield is not just a number on a screen. It is a simple equation:
Yield = (Revenue — Cost) \pm \text{Risk Adjustment}$$
Once you view DeFi through this lens, the “magic” disappears and is replaced by something much better.
Stop being the yield, start engineering it.
Explore Concrete at app.concrete.xyz.
