In cryptocurrency, ‘yield’ refers to the return or profit generated from holding digital assets. There are several ways to earn yield in the crypto space, including lending, staking, and providing liquidity, amongst others.
Some cryptocurrencies offer interest on holdings, similar to traditional savings accounts. Users can also earn interest by lending their digital assets to others through platforms like decentralised finance (DeFi) protocols or centralised exchanges. Many blockchain networks use a Proof of Stake (PoS) consensus mechanism where users can stake their tokens to help secure the network and earn staking rewards in return.
In DeFi protocols, users can provide liquidity to liquidity pools by depositing pairs of tokens. They earn yield in the form of trading fees (and sometimes additional tokens) as rewards for contributing to the liquidity of the platform.
