The most recent moves by Decentralized Finance (DeFi) have been the moving from traditional, centralized institutions. The move has been towards a peer-to-peer finance system. Many incentives under DeFi are gaining traction. One is the Real Yield narrative, where protocols pay out the yield to users based on revenue generation.
We try to demystify the narrative and why it is gaining a grip in crypto.
What is Real Yield
Real yield is a share of a protocol’s revenue, which by staking or locking their governance token, protocols get to earn their revenue. The real yield comes as a yield derived from real revenue generation, as opposed to revenue derived from token emissions. The system operates in a way that it distributes revenue in the form of a dominant token, either ETH or USDC, a DeFi 2.0 protocol.
Furthermore, real yield allows users to share in platform revenue and paves the way for their paying through the tokens they want. In this case, comes the implication that the greater the revenue from a crypto project, the greater the yield provided to users.
Therefore, betting on real yield projects becomes a bet on its ability to accrue new users and also increase revenue generation over time to reward token holders.
Why Real Yield?
Real yield is a game changer as it differs from conventional DeFi of user acquisition. In the conventional DeFi, users get exorbitantly inflated, unsustainable yearly yields to raise the number of user funds deposited.
Even though the yields appeal to traders, they cannot be maintained by false yield or token emissions. As such, they require creating new tokens from scratch and paying out rewards for the tokens.
For a project to have the features of real yield, higher inflation emissions are not necessary. Such projects embrace the idea of giving value and using accumulating methods that rely on a genuine, consistent, and generally committed user base.
Such real projects that generate yield through actual revenue generation are gaining more traction. They offer leverage trading with deep liquidity and low fees while having more positives. Such include DYDX, GMX, GNS, SNX, and UMAMI, which come as DEXs with a good long-term bet.
Final Thoughts
Real yield is gaining traction as the days go by. It is requisite for the growth of any cryptocurrency business to attract new users and grow revenue generation over time. This works as a compensation strategy for holders to focus on genuine returns. Thus, a great thing in the crypto space.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.
