Dual Yield Incentives

Definition ∞ Dual yield incentives involve offering participants two distinct forms of reward for providing liquidity or staking assets within a decentralized finance protocol. This typically includes a base yield from transaction fees or protocol operations, augmented by additional tokens distributed as a governance reward or project subsidy. The objective is to attract and retain capital by maximizing potential returns for users. Such incentives aim to boost protocol liquidity.
Context ∞ The effectiveness and sustainability of dual yield incentives are frequently analyzed in crypto news, especially concerning their impact on token economics and overall protocol health. A key discussion point involves the long-term value proposition of the incentive tokens and whether such strategies lead to genuine network utility or merely short-term speculative interest. Observing how protocols manage these incentive structures provides insight into their growth strategies and financial stability.