Definition ∞ Built-in yield describes an intrinsic mechanism within certain digital assets or protocols that automatically generates returns for holders. This yield accrues from protocol operations, such as transaction fees, staking rewards, or automated market-making activities. It contrasts with external yield sources, deriving directly from the asset’s fundamental design. The generation of this value is often a core feature of the asset’s economic model.
Context ∞ The concept of built-in yield is central to evaluating the economic appeal of many decentralized finance protocols and proof-of-stake cryptocurrencies. Regulatory bodies are increasingly scrutinizing these mechanisms, particularly regarding their classification as securities and the associated investor protection requirements. Understanding the sustainability and source of such yields is critical for assessing investment risk and market trends.
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