A 20% yield looks attractive until you ask what’s inside the vault.
DeFi lending vaults have crossed a major milestone: deposits now exceed 10 billion USD, up from roughly 4 billion at the start of last year.
But here’s the part many yield hunters overlook.
A vault is not risk free just because deposits and transactions are visible on-chain.
Three risks deserve attention:
Collateral risk: borrowers may be backed by assets that lose value or become difficult to sell.
Liquidity risk: withdrawals can become harder when a market is stressed.
Curator risk: someone still chooses the lending strategy, risk limits and asset exposure.
My take: the next test for DeFi yield products isn’t just how much capital they attract. It’s how transparently they manage risk when markets turn against them.
A high advertised APY is a potential return not proof of safety.
What matters more to you when evaluating a DeFi vault: APY, collateral quality, or the curator’s track record?
#DeFi #ETH #crypto #RiskManagement #yield
DeFi lending vaults have crossed a major milestone: deposits now exceed 10 billion USD, up from roughly 4 billion at the start of last year.
But here’s the part many yield hunters overlook.
A vault is not risk free just because deposits and transactions are visible on-chain.
Three risks deserve attention:
Collateral risk: borrowers may be backed by assets that lose value or become difficult to sell.
Liquidity risk: withdrawals can become harder when a market is stressed.
Curator risk: someone still chooses the lending strategy, risk limits and asset exposure.
My take: the next test for DeFi yield products isn’t just how much capital they attract. It’s how transparently they manage risk when markets turn against them.
A high advertised APY is a potential return not proof of safety.
What matters more to you when evaluating a DeFi vault: APY, collateral quality, or the curator’s track record?
#DeFi #ETH #crypto #RiskManagement #yield