This is the first post of a two-part series on DeFi yields. Part 1 covers tactically where yield comes from and Part 2 talks about my thoughts on what underpins DeFi as a whole!
You may not know much about crypto, but you probably do know someone YOLO’ing into “edible tokens”, “yield farming to make 1000% APY”, and/or rethinking their career trajectory to include crypto trading at Jane Street.
At the same time, we’re also starting to see legitimate crypto “neobanks” and pseudo-Wealthfront products like Eco, Dharma, BlockFi popping up that are literally a 10x better product because they have 10x yields that of premier saving accounts like Goldman’s Marcus. When you can get 5-10% rates vs paltry 0.01% rates, it piques a lot of people’s curiosities.
So what gives? Where are these yields coming from, are they sustainable, and is this all just an elaborate Ponzi Scheme?