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How to generate yields onchain

Every yield is a payment. Someone, somewhere, is handing over money — and they have a reason. A leveraged trader paying to stay long. A borrower paying for liquidity. A protocol paying for security it cannot buy any other way. The US Treasury paying its coupon. A token treasury paying you to show up.

Find that person and you understand the yield. Fail to find them and the APY on your screen is just a number that has not stopped yet.

This page is a map of every category of onchain yield: who pays, why they keep paying, what makes the payment stop, and — the axis most comparisons skip entirely — where your capital sits while it earns.

Every onchain yield source, in one table​

CategoryWho pays youWhat you're being paid forWhat kills it
Lending marketsBorrowersSupplying liquidity they can borrowBorrowing demand falls; utilization spikes constrain withdrawals
Perpetual funding and basisLeveraged tradersTaking the other side of crowded leverageFunding flips negative or compresses
Onchain private creditInstitutional borrowersUnsecured or lightly secured credit riskA borrower defaults and there is no collateral to seize
Proof-of-stake stakingThe protocolSecuring the chainSlashing, validator downtime, reward-rate decay
RestakingMultiple protocolsReusing the same stake as shared securityCorrelated slashing across services you did not evaluate
AMM liquidity provisionSwappersStanding ready to trade both sidesImpermanent loss exceeding fees on trending prices
Perp DEX liquidity vaultsTraders and the venueBeing counterparty to the order flowA run of profitable traders draws down the vault
Tokenized Treasuries and RWAsAn offchain issuerLending to governments or firmsPolicy rates fall; the issuer, custodian, or wrapper fails
Protocol savings ratesProtocol surplusHolding the protocol's dollarGovernance votes the rate down
Token emissions and pointsThe token's future holdersBeing early and supplying TVLEmissions end, or the token falls faster than you accrue it
Options and structured productsOptions buyersSelling volatility and capping your upsideThe move you sold protection against actually happens
Directional tradingThe marketBeing right about price, with risk sized deliberatelyBeing wrong, or being right with the position sized badly

Four common products are not sources at all. Aggregators, yield tokenization, managed vaults, and looping are wrappers: they repackage, route, or amplify a source underneath. Read them by looking through the wrapper to whoever is actually paying. They are covered further down.

The yield sources​

1. Lending markets​

Supply USDC to Aave, Morpho, or Compound and borrowers pay you interest for the liquidity. Rates float with utilization: the more of the pool is borrowed, the more you earn, and the closer you get to the point where withdrawing in full becomes constrained.

The reflexive part is the part people miss. High utilization is simultaneously your best rate and your thinnest exit. You are paid most precisely when leaving is hardest.

Return source: borrower demand for leverage or working capital.

Structure: pooled. Your USDC leaves your wallet for a shared contract and you hold a claim token.

2. Perpetual funding rates and basis​

Perpetual futures have no expiry, so they need a mechanism to stay tethered to spot. That mechanism is funding: when the perp trades above spot, longs pay shorts. Hold spot and short the perp against it in matched size, and price movement cancels between the legs. What remains is the funding payment.

This is the closest thing DeFi has to a structural carry trade. Demand for leveraged long exposure in crypto has been persistent enough that funding is positive much of the time — not always, and never guaranteed, which is exactly the risk.

Return source: leveraged traders paying to hold their position.

Structure: varies enormously, and this is where custody gets interesting. Ethena's sUSDe, Resolv, Solstice, and USDX all run versions of this strategy and hand you a token representing a claim on their pooled book. Deploy Finance runs it inside your own wallet. Same return source, entirely different thing to hold.

See How funding-rate yield works for the mechanics, and Best funding-rate strategies for how implementations differ.

3. Onchain private credit​

Maple, Centrifuge, Goldfinch, Clearpool, and TrueFi lend to institutional borrowers — trading firms, fintechs, real-world businesses — often undercollateralized. The rate is higher than a money market because you are being paid for credit risk rather than for utilization.

The honest framing: in an overcollateralized lending market, a default is a liquidation. In private credit, a default is a workout. Pools carry KYC, jurisdiction, and eligibility constraints, and exits are typically scheduled rather than instant.

Return source: borrowers' interest payments, plus a spread for the chance they do not pay.

4. Proof-of-stake staking​

Stake ETH, SOL, or another proof-of-stake asset and the protocol pays you for validating. This is the most fundamental yield in crypto: not a counterparty paying you, but the network's issuance and fee schedule paying for its own security.

Liquid staking tokens — stETH, jitoSOL, and others — hand you a transferable receipt so the capital can keep working elsewhere. That receipt carries its own risk: it can trade below the asset it represents, which has happened during stress.

Return source: protocol issuance and priority fees.

Note: this yield is denominated in the staked asset. Staking ETH gives you more ETH, not more dollars. If the goal is growing a dollar balance, the price of ETH will matter far more than the staking rate.

5. Restaking​

Restaking reuses staked capital as security for additional services. EigenLayer and its liquid restaking tokens are the best-known form. You earn extra reward streams for accepting extra slashing conditions.

Read that trade carefully. The yields stack; so do the risks, across services whose conditions you may never individually evaluate. A single correlated fault can hit obligations you did not know you had underwritten.

6. AMM liquidity provision​

Deposit two assets into a Uniswap-style pool and earn a share of every swap that routes through you. Concentrated liquidity raises fee density while price stays in your range and stops earning entirely when it leaves. Managers like Arrakis and Gamma automate the rebalancing.

The structural cost is impermanent loss: as prices diverge, the pool automatically sells you the winner and buys you the loser. Fees have to out-earn that drift. In a strong trend, they often do not.

Return source: traders paying for immediacy.

7. Perpetual DEX liquidity vaults​

Hyperliquid's HLP, GMX's GM and GLV pools, and Jupiter's JLP pool depositor capital to act as counterparty to a venue's order flow — providing liquidity, absorbing trader PnL, and taking a share of fees.

You are, in plain terms, the house. Over enough hands the house edge is real; over any given week, traders can win. HLP locks new deposits for four days from your most recent deposit. Drift vaults require a redemption request plus a notice period commonly cited around one to seven days, and user-led managers commonly take a performance fee often cited in the 20–30% range.

Return source: trading fees, plus the aggregate losses of the venue's traders.

8. Tokenized Treasuries and real-world assets​

BlackRock's BUIDL, Ondo's USDY and OUSG, Superstate USTB, Hashnote USYC, Mountain USDM, OpenEden TBILL, and Midas mTBILL bring offchain cash flows onchain. The token is a wrapper; the yield is a Treasury bill's coupon.

Two things follow. First, the return is a policy rate — it moves when central banks move, and it compresses when they cut. Second, the risk is not primarily smart-contract risk. It is issuer, custodian, transfer-agent, and eligibility risk, and many of these products gate access by qualifying status and jurisdiction.

Return source: governments and investment-grade borrowers, offchain.

9. Protocol savings rates​

Sky Savings (sDAI/USDS) and similar products pay a rate set by governance out of protocol surplus. Simple, liquid, and legible — and a decision rather than a market. The rate is whatever the DAO votes it to be next.

10. Token emissions, incentives, and points​

The protocol prints its own token and pays you to supply liquidity or TVL. Points programs are the same trade with the payment deferred and unspecified.

This is the one category where the payer is not a counterparty with a business reason. It is future token holders, via dilution. That does not make it worthless — bootstrapping is a real function, and early participants have been paid well — but it does mean the headline APY and the realized return can differ by the entire price chart. Quote emission yields in the emitted token rather than in dollars and you will treat them correctly.

What kills it: the schedule ends, or the token falls faster than you accrue it.

11. Options and structured products​

Covered-call and put-selling vaults, principal-protected notes, and volatility strategies pay you a premium for accepting a defined payoff. You are selling insurance. The premium arrives steadily; the claim arrives all at once.

Sold well, this is a genuine risk premium — implied volatility has historically tended to run above realized. Sold carelessly, it is a strategy that prints for eleven months and returns it in one.

12. Directional trading​

Not usually filed under "yield," which is a categorization problem rather than an economic one. Directional exposure — long, short, or flat, with position size set by a loss budget rather than by conviction — is a return stream with a clear source: being right about price often enough, with losses cut before they compound.

It is the highest-variance category here, and the only one where the outcome depends on judgment rather than on a mechanism. Whether that judgment is yours, a fund's, or an agent's, it should be sized as the risk it is.

The four wrappers​

None of these create yield. They move it, reshape it, or lever it.

Yield aggregators. Yearn, Beefy, Idle, and Sommelier rotate pooled capital across underlying sources and auto-compound. You are buying execution and monitoring, and paying management and performance fees for it. Your risk becomes the union of every protocol the strategy touches.

Yield tokenization. Pendle splits a yield-bearing asset into principal (PT) and yield (YT) tokens, so you can lock a fixed rate by buying PT at a discount, or express a view on future yield with YT. This is a market for yield, not a producer of it, and it is only as sound as the asset it wraps.

Managed vaults and copy trading. dHEDGE, Enzyme, Neutral Trade, and Hyperliquid's user vaults let a manager trade pooled capital. You are underwriting a person or a team, and the mandate is whatever they decide it is today.

Looping. Supply, borrow against it, supply again. Leverage adds no return source. It multiplies whatever the base is, including the drawdown, and it adds a liquidation price to a position that did not have one.

If you cannot name the payer after peeling off every wrapper, you have not found the yield. You have found a marketing surface.

The axis nobody prices: where your capital sits​

Two products can share a return source and still be completely different things to own. The difference is structural, and it decides what happens when you want out.

CustodialPooled non-custodialIndividually held
ExamplesCoinbase Earn, Binance Earn, exchange botsAave, Yearn, sUSDe, perp DEX vaults, RWA tokensDeploy Finance agents
Where your assets areThe platform's balance sheetA shared smart contract, pooled with everyone elseYour own wallet
What you holdAn account balanceA claim: aTokens, vault shares, sUSDe, a wrapped noteYour USDC, and an open position
Who can move your fundsThe platformThe contract's logic, on behalf of the poolOnly you
Exit depends onPlatform terms and solvencyPool liquidity, cooldowns, lock-ups, notice periodsClosing the position and paying gas
Whose behavior affects youEvery other customer's, if there is a runEvery other depositor's, through utilization and timingNobody's

Non-custodial and self-custodial are not synonyms, and the industry uses them as if they were. Aave is genuinely non-custodial: no company can seize your supplied assets. Your USDC is also sitting in a shared contract, subject to that pool's utilization, and your withdrawal competes with everyone else's. Nobody took custody. Your funds still left your wallet.

That distinction is invisible while everything works, and it is the only thing that matters when it does not. Cooldown windows, four-day locks, notice periods, and utilization ceilings are the same fact wearing different clothes: your exit is a function of the pool, not of you.

Deploy Finance: the same yield, without giving up the asset​

Deploy Finance runs autonomous trading agents that generate returns from your own wallet. No vault contract takes custody, no share token is issued, and nothing is pooled with other users. Across every category on this page, it is the option where the capital never leaves your control while it earns.

How the structure works. You sign in with email or Google and a self-custodial wallet is created through Privy's embedded wallet infrastructure — no browser extension, no seed phrase to memorize. Private keys are never stored whole: each is split into three encrypted shares using Shamir's Secret Sharing and reconstructed only briefly, inside a trusted execution environment. You can export your keys at any time, so leaving does not require anyone's permission.

How the agent works. Activating an agent creates a separate, scoped session key rather than exposing the wallet's main key. The agent can view balances, open, close, and manage positions, and set stops. It cannot withdraw your funds and it cannot transfer assets to another address. The permissions appear on screen before you grant them, and you can revoke the key at any time. See Self-custody and session keys.

Two agents are live, both funded and settled in USDC, both executing on decentralized perpetual markets — currently Hyperliquid:

  • Income: Funding Rates — market-neutral. Holds long spot against a short perpetual on the same asset so price movement cancels between the legs, and collects the funding that leveraged longs pay to shorts. The short leg is leveraged for capital efficiency, which amplifies funding capture without adding directional exposure. Minimum $100 USDC.
  • Superstar — directional. Goes long, short, or flat across spot, perpetuals, and HIP-3 markets, re-reading the market every four hours across eighteen inputs and carrying no view from prior cycles. Position size comes from a fixed loss budget; stops are set before entry and never widened. Minimum $10,000 USDC.

There is no subscription, no management fee, and no performance cut on your deposits. You pay blockchain gas and exchange trade fees. See Fees.

What you give up​

Stated plainly, because a page that only lists upside is an advertisement:

  • No composability. A vault share is an ERC-20 you can post as collateral, supply to a pool, or wrap. A wallet balance under an agent's mandate is not a token anyone can integrate. If you want a yield-bearing asset that plugs into the rest of DeFi, a vault share does that and this does not. See Alternatives to ERC-4626 vaults.
  • You take the mandate as published. No tuning the strategy, no picking the venue, no overriding a trade.
  • The return is not a lending rate. It comes from trading perpetual futures, which carries liquidation, funding-reversal, venue, and execution risk that a money market does not have.
  • Holding the keys means holding the responsibility. Exportable keys are only an advantage if you store them properly.
  • Minimums are real. Superstar requires $10,000 in working capital.

How to evaluate any onchain yield​

Five questions. Any product that cannot answer all five clearly is answering one of them badly.

  1. Who is paying, and why do they keep paying? Name the counterparty: borrower, trader, protocol, issuer, or future token holder. If the answer is "the protocol generates it," ask again.
  2. What breaks the payment? Every source in the table above has a specific failure mode, not a general one. Know yours before you allocate rather than after.
  3. Where does my capital physically sit? Wallet, shared contract, or balance sheet. This determines your exit, not the marketing copy.
  4. What does leaving actually require? A transaction, a redemption against available liquidity, a cooldown, a notice period, or an email to support. Find out before you need to know.
  5. What is the fee doing to the number you were shown? Management fees, performance cuts, and commissions — commonly cited at 25–35% of gross staking rewards on major custodial platforms — come out of the advertised rate, not out of thin air.

Where to start​

Match the source to the job rather than to the headline rate.

Want a floating rate on stablecoins with deep liquidity? A major lending market, accepting pooled exposure and utilization risk.

Want the return of a policy rate with offchain backing? Tokenized Treasuries, if you clear the eligibility gates and accept that the rate follows central banks.

Want to be paid for securing a network? Staking, denominated in the asset you stake — which means the asset's price, not the reward rate, will dominate your dollar outcome.

Want structural carry from crypto's demand for leverage? Funding-rate strategies. Then decide the structure: a pooled synthetic dollar, or a position held in your own wallet.

Want a directional stance without watching charts? Delegated directional execution with a hard loss budget, sized as the higher-variance allocation it is.

Want any of the above without the capital leaving your wallet? That narrows the field considerably, which is the entire point of the custody axis.

Every option on this page carries risk, and a higher rate always reflects a risk someone is taking — often you. Read Risks before allocating.

Learn more​

Start with Deploy Finance​

Create a self-custodial Deploy Finance wallet and review the live agents.