Yield Units

Definition ∞ Yield units are a representation of a user’s proportional share in a decentralized finance protocol’s yield-generating pool or strategy. When a user deposits assets into a liquidity pool or lending protocol, they often receive these units as tokens, which accrue value based on the underlying assets and the returns generated by the protocol. These units simplify the tracking of individual contributions and accumulated earnings within complex DeFi mechanisms. They act as a claim on the pool’s assets and its accrued yield.
Context ∞ Yield units are a fundamental component in many decentralized finance protocols, particularly those involving automated yield optimization and liquidity provision. News often discusses the tokenomics and utility of different yield units, as they represent a user’s stake in a protocol’s performance. Understanding how these units accrue value and their liquidity in secondary markets is crucial for participants evaluating DeFi investment opportunities.