Solana ($SOL) hosts many decentralized finance (DeFi) pools that advertise high annual percentage rates (APR). However, these yields often come from different sources.
Three common yield sources in DeFi:
Trading fees
Generated when users swap assets in liquidity pools.
Yield depends on real trading volume.
Token incentives (emissions)
Protocols distribute reward tokens to attract liquidity.
These rewards are usually temporary and may decrease over time.
Protocol revenue sharing
Some platforms share a portion of their platform income with liquidity providers or stakers.
This yield typically grows as platform usage increases.
Why this matters:
The headline APR in a pool may combine several of these sources. If most of the yield comes from temporary incentives, the return can decline once rewards are reduced.
Takeaway:
Before depositing funds into a DeFi pool, it helps to understand what actually generates the yield and whether it is sustainable over time.
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