The latest is passing Decentralized finance (DeFi) were a departure from traditional, centralized institutions. The step was towards a peer-to-peer financial system. Many DeFi incentives are gaining traction. One of these is the Real Yield narrative, where protocols pay out yield to users based on revenue generation.
We try to demystify the narrative and why it’s catching on in crypto.
What is real yield
Real Yield is a fraction of a protocol’s revenue that protocols receive by staking or blocking their governance token to generate their revenue. Real revenue is revenue derived from generating real revenue, as opposed to revenue derived from token issuance. The system works by distributing revenue in the form of a dominant token, either ETH or USDC, a DeFi 2.0 protocol.
In addition, the real yield allows users to share in the platform’s earnings and paves the way for their payment by the desired tokens. In this case, the implication is that the higher the revenue from a crypto project, the greater the yield offered to users.
Therefore, betting on real revenue projects becomes a bet on its ability to attract new users and also increase revenue generation over time to reward token holders.
Why real returns?
Real Yield is a game changer as it differs from traditional DeFi of user acquisition. In conventional DeFi, users receive exorbitantly inflated, unsustainable annual returns to increase the number of user funds deposited.
While the yields are attractive to traders, they cannot be sustained by fake yields or token issuance. Therefore, they have to create new tokens from scratch and pay out rewards for the tokens.
Higher inflation emissions are not required for a project to have real income characteristics. Such projects embrace the idea of creating value and using cumulative methods, backed by a genuine, consistent, and universally engaged user base.
Such real projects that generate returns through actual revenue generation are gaining more and more traction. They offer leveraged trading with high liquidity and low fees while having more benefits. These include DYDX, GMX, GNS, SNX, and UMAMI, which come as DEXs with a good long-term bet.
The real yield is gaining traction as the days go by. Growing a cryptocurrency business requires attracting new users and increasing revenue generation over time. This serves as a compensation strategy for holders to focus on real returns. So a great thing in the crypto space.
Vincent Munene is a freelance writer and a huge blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return he likes to educate people and update them on everything blockchain related. He is a biochemist by profession and also enjoys playing the piano.
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