Dual yield refers to earning returns from two distinct sources simultaneously within a digital asset strategy. This typically involves staking a cryptocurrency to receive native network rewards while also participating in a liquidity provision scheme or another yield-generating activity. The combination aims to maximize capital efficiency and overall returns for participants. Strategies often involve specific DeFi protocols designed for such aggregated returns.
Context
News reports often highlight dual yield opportunities in new decentralized finance protocols, attracting users with potentially higher annual percentage yields. A key consideration for participants is understanding the compounded risks associated with multiple yield sources, including impermanent loss and smart contract vulnerabilities. Future innovations may simplify dual yield mechanisms and enhance risk assessment tools.
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