Glossary · R
Real Yield
Returns generated from genuine protocol revenue — trading fees, borrowing interest, or consensus rewards — rather than inflationary governance token emissions. Real yield is sustainable: GMX distributes trading fees in ETH to stakers; Uniswap's fee switch distributes swap fees to UNI holders; Aave's treasury earns from protocol revenue. Token emission-funded yield is not real yield — it dilutes existing holders and depends on new buyers absorbing selling pressure.
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How Real Yield works in practice
Real yield is return paid from protocol revenue — trading fees, borrowing interest, liquidation penalties — rather than from newly issued tokens. The distinction matters because emissions-funded yield dilutes the very token it pays in, while fee-funded yield does not.
Worked example
A DEX earning 10m annually in fees and distributing 50% to stakers is paying 5m of real yield. Against a 100m staked value, that is a 5% return which persists whether or not the token price moves. A protocol paying 30% in its own token from an emissions schedule is paying nothing of the sort.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
'Real yield' has become a marketing phrase applied loosely. Check whether the revenue is genuinely fees paid by users, and whether it is paid in a stable asset or in the protocol's own token — the second reintroduces the problem the term was coined to describe.
Real Yield: common questions
- What is Real Yield?
- Returns generated from genuine protocol revenue — trading fees, borrowing interest, or consensus rewards — rather than inflationary governance token emissions. Real yield is sustainable: GMX distributes trading fees in ETH to stakers; Uniswap's fee switch distributes swap fees to UNI holders; Aave's treasury earns from protocol revenue. Token emission-funded yield is not real yield — it dilutes existing holders and depends on new buyers absorbing selling pressure.
- How does Real Yield work in practice?
- Real yield is return paid from protocol revenue — trading fees, borrowing interest, liquidation penalties — rather than from newly issued tokens. The distinction matters because emissions-funded yield dilutes the very token it pays in, while fee-funded yield does not.
- Can you give an example of Real Yield?
- A DEX earning 10m annually in fees and distributing 50% to stakers is paying 5m of real yield. Against a 100m staked value, that is a 5% return which persists whether or not the token price moves. A protocol paying 30% in its own token from an emissions schedule is paying nothing of the sort.
- What do people get wrong about Real Yield?
- 'Real yield' has become a marketing phrase applied loosely. Check whether the revenue is genuinely fees paid by users, and whether it is paid in a stable asset or in the protocol's own token — the second reintroduces the problem the term was coined to describe.