Sustainable yield refers to the generation of consistent returns or income from an asset or investment strategy over an extended period without depleting the underlying capital. In decentralized finance, this concept relates to protocols that offer interest or rewards in a manner that can be maintained long-term without relying on unsustainable token inflation or ponzi-like structures. It prioritizes the health of the protocol’s economic model and the preservation of its asset base. Achieving sustainable yield is a key challenge for many DeFi applications.
Context
The pursuit of sustainable yield is a central and often debated topic within the decentralized finance sector, especially after periods of speculative excess. Analysts frequently scrutinize the tokenomics and revenue models of DeFi protocols to assess the long-term viability of their offered returns. News reports often highlight projects that demonstrate robust mechanisms for generating yield without compromising the stability of their underlying assets.
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