Definition ∞ DeFi Yield Unwinding describes the process where participants in decentralized finance protocols withdraw their staked or lent digital assets. This action is typically initiated in response to diminishing returns, heightened market volatility, or changes in protocol conditions. It represents a reversal of prior capital commitments.
Context ∞ The unwinding of DeFi yield positions can exert substantial pressure on market liquidity and asset prices within the decentralized finance ecosystem. Such events may precipitate cascading liquidations and broader market corrections. Observers monitor this trend to gauge overall market stability and investor sentiment in the DeFi space.
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