DeFi Yield Mechanics

These concepts help explain why DeFi yields move without making any price predictions.

Supply APY

Supply APY is the estimated yearly return paid to lenders who supply assets to a lending market.

Utilization rate is the fraction of supplied liquidity that is currently borrowed, often driving interest-rate changes in DeFi pools.

An interest rate model is a set of rules (often a curve) that maps utilization to borrow and supply rates in a lending protocol.

A yield aggregator is a protocol or strategy wrapper that routes capital across opportunities to optimize yield under its stated rules and risks.