Definition ∞ Daily yield represents the percentage return or profit generated on a digital asset investment over a single 24-hour period. This metric is commonly associated with staking, lending, or liquidity provision within decentralized finance protocols. It provides a granular view of an asset’s earning potential and is often annualized to project longer-term returns. Investors frequently use daily yield to evaluate the efficiency and attractiveness of various income-generating opportunities.
Context ∞ The concept of daily yield is a central component of many DeFi protocols, attracting users seeking passive income from their digital assets. While high daily yields can be appealing, they often carry proportional risks, including smart contract vulnerabilities, impermanent loss, or protocol instability. Market participants consistently assess the sustainability and security of these yield-generating mechanisms. Understanding the underlying risk factors associated with these returns is crucial for informed participation.
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