Passive Income Primitive

Definition ∞ A Passive Income Primitive is a foundational mechanism within decentralized finance designed to generate earnings without active management. This refers to core smart contract functions or protocol features that enable users to earn yield by simply holding or staking digital assets. Examples include automated lending pools, liquidity provider rewards, or staking rewards from proof-of-stake blockchains. These primitives allow digital asset holders to accrue value over time through the network’s operations.
Context ∞ The discourse on Passive Income Primitives often addresses their sustainability, underlying risk factors, and the transparency of their yield generation methods. A critical consideration involves evaluating the smart contract security and economic viability of various protocols offering these mechanisms. Monitoring regulatory interpretations of yield-generating activities in decentralized finance remains important.