The promise of receiving attractive returns has been a cornerstone of the crypto and decentralized finance (DeFi) industry.
Early models managed to attract massive amounts of capital, driven by the high interest rates they offered.
But the real question is: how did we get to this point?
1️⃣ The Rise of Infinite APYs
Everyone remembers that era of indiscriminate forks, when thousands of tokens were launched just to feed outrageous APYs.
But before reaching that moment, someone had to throw the first stone, right?
The first protocol considered fully DeFi was MakerDAO, launched in 2017.
It allowed users to lock ETH as collateral and mint DAI, a decentralized stablecoin pegged to the dollar.
MakerDAO was revolutionary for two reasons:
- It introduced the concept of collateralized loans without intermediaries.
- It proved it was possible to create a stablecoin without holding actual dollar reserves.
Soon after, other pillars of the ecosystem emerged, such as Uniswap (automated exchanges without an order book) and Compound (programmable money markets), laying the foundation for today’s DeFi landscape.
The ignition point was the launch of Compound’s COMP token in June 2020.
Although the protocol already provided interest for lending and borrowing, the new model rewarded users with COMP tokens just for using the protocol, even if they didn’t actually need the loan.
This incentivized a frenzied behavior: borrowing to lend again, in a leveraged loop that multiplied gains, an “infinite loop.”
That’s how the phenomenon known as yield farming was born, along with the craze for astronomical APYs.
But if we ask people from that time, few likely remember those moments, as yields weren’t outrageous just yet.
So the question is: who inflated the bubble, and how?
Several Players Helped Fuel the Bubble:
- Yearn Finance (YFI)
Led by independent developer Andre Cronje, YFI launched without a token pre-mine or private sale.
All tokens were distributed to users providing liquidity.
Within weeks, YFI skyrocketed from zero to over $30,000, and its automated vaults went viral.
- SushiSwap
In August 2020, SushiSwap, a fork of Uniswap, offered SUSHI rewards to users migrating liquidity from Uniswap.
It was a successful "vampire attack" that revealed how high APYs could destabilize even the most established projects.
- PancakeSwap and Binance Smart Chain (BSC)
Backed by Binance, PancakeSwap replicated the model on the BSC.
It offered APYs over 1,000% and dirt-cheap fees compared to Ethereum, attracting a new wave of retail investors.
Its token, $CAKE, combined with staking and exponential price growth, triggered intense FOMO, drawing in even more capital.
Following PancakeSwap’s popularity, many protocols emerged copying $CAKE’s strategy.
However, most of these DeFi tokens lacked sustainable foundations.
APYs were funded by printing more tokens, and when users started selling their rewards, prices collapsed.
Key Reasons for the Collapse:
- Over-minting of tokens: runaway inflation without real revenue
- Mass dumping of rewards: users farmed and sold immediately
- Lack of long-term utility: many projects were just forks with cosmetic changes
- Hacks and bugs: platforms like Harvest Finance, Value DeFi, and Pickle lost millions to exploits
The market (partially) learned that sustainable returns require real economic models, not just endless token printing.
And this is where Real Yield was born.
2️⃣ What Is Real Yield?
Real yield in DeFi refers to sustainable interest or rewards generated from actual revenue streams, such as trading fees, lending fees, or protocol profits.
Unlike fake yield, inflated by endless token emissions without real backing, real yield:
- Doesn’t depend on minting new tokens
- Is distributed to holders or stakers from actual net profits
- Is lower, but more stable and legitimate
For instance, if a DEX charges a fee on every trade and redistributes part of that to token holders, that’s real yield.
It’s not speculative farming, it’s profit-sharing.
So, when, and thanks to whom, did Real Yield gain popularity?
The term real yield began gaining traction in late 2021 and early 2022, after the collapse of many inflated yield farming platforms (such as OlympusDAO and its many forks).
In response to these events, several protocols emerged:
- GMX
A decentralized trading platform on Arbitrum.
It distributed trading fees directly to GMX stakers, in real ETH, not inflationary tokens.
- dYdX v3
Introduced rewards more closely tied to actual protocol usage.
Trading fees are redistributed among LPs and stakers.
Real yield became a maturity narrative in the space, aiming to attract institutional capital and less speculative users.
3️⃣ The Current State of Things
The situation is mixed, but clearly more favorable than in 2020:
There’s growing support for real yield:
- More cautious investors after the collapse of Terra, Celsius, and others.
- Protocols like GMX, Lido, Pendle, Aevo, EtherFi, Synthetix v3, and IAESIR are betting on models with organic revenue and sustainable distribution.
- New narratives like restaking (Eigenlayer), liquid staking, or modular yield are aligned with this philosophy.
But risks still remain:
- Some protocols disguise inflationary yield as “real yield.”
- There’s still a lot of speculative capital chasing trends like memecoins or Layer 2 airdrop farming.
Notable Protocols Following the Real Yield Philosophy
1. GMX – Perpetual Exchange With ETH-Paid Fees
GMX is a decentralized futures trading protocol operating on Arbitrum and Avalanche.
Its model is simple but effective: GMX stakers and GLP liquidity providers receive a share of the actual trading fees, paid in ETH or AVAX, not in inflated tokens.
- GMX became famous for distributing tens of millions of ETH during peak volume periods
- Yield is directly tied to protocol usage: more trading = more rewards
- It’s considered a pioneer in proving that a DEX can generate stable cash flow for its users
2. IAESIR – Algorithmic Hedge Fund With Real Profits
IAESIR is a DeFi investment fund that combines AI-based algorithmic trading with deflationary tokenomics and multiple revenue streams.
Its real yield model is based on:
- Distributing 70% of the net profits generated by its trading algorithm (based on CNNs and strategies like volatility arbitrage and smart DCA) to investors
Token (Not Yet Launched)
$IASR is not yet available, but it's designed to distribute 70% of the algorithm’s profits.
- No inflation
- Buybacks and burn mechanisms
- Fully aligned with the real yield philosophy
IAESIR offers a transparent, scalable model backed by real technology, built to appeal to both retail and institutional investors.
3. Lido Finance – Leader in Liquid Staking With Validator Rewards
Lido is the largest liquid staking protocol on Ethereum, allowing users to stake their ETH without locking it, in exchange for stETH, a liquid token that represents their staked position.
Lido’s real yield model is based on:
- Rewards are generated from ETH staking through validators operated by trusted node operators.
- These rewards are distributed to stETH holders by automatically adjusting their balances via a rebase mechanism.
- No artificial inflation: rewards come from the actual performance of validators on the Ethereum network.
- Lido charges a fee on staking rewards, part of which goes to participants and part to the protocol’s treasury.
Lido has established itself as a core real yield protocol, attracting millions of users and integrating across multiple DeFi platforms to increase stETH utility.
Its success has helped drive the liquid staking narrative as a legitimate way to earn sustainable and accessible yield on staked assets.
4️⃣ In Summary
1. The APY Boom Was an Inflation-Driven Illusion
- The yield farming craze was fueled by incentives without economic backing.
- Protocols like Compound, Yearn, SushiSwap, and PancakeSwap offered massive returns funded by token emissions, not real productivity.
- This created an unsustainable speculative bubble that collapsed when users began mass selling their rewards.
2. The Collapse Forced the Market to Mature
- The fall of OlympusDAO and similar projects showed that the inflationary model was unviable.
- This phase made it clear that sustainable DeFi yield must come from real revenue, not just printing more tokens.
3. Real Yield Emerged as a Rational Response
- Defined as sustainable returns from fees, commissions, or tangible protocol profits.
- Lower, but much more stable and transparent.
- Represents an evolution toward economic efficiency in DeFi.
4. Real Yield Pioneers Set a New Standard
- Protocols like GMX and dYdX proved it's possible to redistribute real profits (in ETH, not inflationary tokens).
- Helped attract more sophisticated capital and restore trust in the sector after the DeFi Summer.
5. IAESIR Positions Itself as a Key Player in the New Narrative
- Although its token $IASR hasn’t launched yet, it already operates with a profitable AI-based algorithm using CNNs.
- Designed to distribute 70% of real profits to future stakers, without inflation and with deflationary mechanisms.
- Its transparent, tech-driven focus on real performance makes it a strong example of the new DeFi wave.
6. The Present Is Mixed, but Evolution Is Evident
- Many projects have adopted or imitated the real yield approach.
- Yet the ecosystem still struggles with speculative noise, empty promises, and short-lived trends.
- The key will be to differentiate between protocols generating real revenue and those merely disguising inflation.
