Defi Yield Strategies

DeFi Yield Strategies Guide

A practical guide for AI agents helping users navigate DeFi yield opportunities.

Yield Sources in DeFi

1. Lending (Supply-Side)

Deposit tokens into lending protocols, earn interest from borrowers.

| Protocol | Chains | Key Features | |----------|--------|-------------| | Aave V3 | Ethereum, Arbitrum, Polygon, Base, Optimism | Flash loans, e-mode, risk isolation | | Compound V3 | Ethereum, Arbitrum, Base | Single-asset markets, COMP rewards | | Spark | Ethereum | DAI-focused, powered by Maker | | Radiant V2 | Arbitrum, BSC | Cross-chain lending |

Typical APYs: 1–8% for stablecoins, variable for volatile assets

Risks: Smart contract risk, utilization spikes (can't withdraw), oracle failures

2. Liquidity Provision (DEX)

Provide trading liquidity and earn fees from swaps.

Full-Range (V2-style):

• Provide both tokens in a 50/50 ratio
• Earn fees on all trades in the pool
• Subject to impermanent loss

Concentrated (V3-style):

• Choose a price range for your liquidity
• Higher capital efficiency = more fees per dollar
• Higher IL risk if price moves out of range
• Requires active management

DEXs: Uniswap V3, Camelot, Curve, Balancer

3. Auto-Yield Stablecoins

Hold a stablecoin that automatically earns yield with no action required.

• USDs by Sperax: Auto-rebasing stablecoin on Arbitrum. Backed by USDC/USDT, yield from Aave/Compound/Curve. 70% of yield goes to holders. Just hold it — yield is automatic.
• sDAI by Maker: DAI deposited into Maker's DSR

4. Liquidity Farming (Extra Rewards)

Stake LP tokens in farming contracts to earn additional reward tokens on top of trading fees.

• Sperax Farms: No-code farming on Arbitrum — create farms for any supported pool
• Convex/Curve: CRV + CVX rewards on Curve pools
• Protocol-specific: Many protocols offer token incentives for liquidity

5. Vault Strategies (Auto-Compounding)

Deposit into vaults that automatically compound rewards.

| Protocol | Strategy | |----------|----------| | Yearn V3 | Multi-strategy vaults, automated rebalancing | | Beefy | Auto-compound across 20+ chains | | Plutus | plvGLP, plvHEDGE on Arbitrum |

Risk Framework

Risk Tiers

| Tier | Risk Level | Typical APY | Examples | |------|-----------|-------------|---------| | 1 | Low | 2–6% | Stablecoin lending (Aave/Compound), USDs auto-yield | | 2 | Medium | 5–15% | Blue-chip LP (ETH/USDC), established farms | | 3 | High | 15–50% | Concentrated liquidity, new protocol incentives | | 4 | Very High | 50%+ | Leveraged farming, new chain launches, unaudited |

Key Risk Factors

1. Smart contract risk: Is the protocol audited? How long has it been live?
2. Impermanent loss: For LP positions, how volatile is the pair?
3. Liquidation risk: For leveraged positions, what's the health factor?
4. Protocol risk: How decentralized is governance? Multisig setup?
5. Yield sustainability: Where does the yield come from? Is it from real revenue or token emissions?

Red Flags

• APYs that seem too good to be true (>100% on stablecoins)
• Unaudited contracts
• Anonymous teams with no track record
• Yield entirely from token emissions (not sustainable)
• Lock-up periods with no exit option

Strategy Examples

Conservative: Stablecoin Yield Stack

1. Hold USDs on Arbitrum (auto-yield, ~3–8% APY)
2. Supply USDC to Aave V3 on Arbitrum (~2–5% APY)
3. Diversify across 2–3 lending protocols

Target: 3–7% blended APY with minimal risk

Moderate: LP + Farming

1. Provide USDs/USDC liquidity on Uniswap V3 (tight range)
2. Stake LP in Sperax Farms for additional rewards
3. Auto-compound with a vault strategy

Target: 8–15% APY with moderate IL risk

Aggressive: Multi-Protocol Optimization

1. Supply ETH to Aave → borrow stablecoins
2. Mint USDs with borrowed stables
3. Provide USDs/ETH liquidity
4. Farm rewards → compound

Target: 15–30%+ APY with leverage and IL risk

Agent Tips

When recommending yield strategies:

1. Always assess risk tolerance first — don't recommend aggressive strategies to beginners
2. Check TVL and audit status before recommending protocols
3. Explain IL for any LP recommendation
4. Sustainable yield > high APY — prefer real yield (fees, lending interest) over pure emissions
5. Diversification — never put everything in one protocol

Links

• Sperax (USDs auto-yield): https://app.sperax.io
• DeFi Llama (TVL tracker): https://defillama.com
• Aave: https://aave.com
• Uniswap: https://app.uniswap.org

Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

• Author: Sperax
• Source: Sperax/sperax-skills
• License: MIT

Install and usage instructions live in the source repository linked above.