What is fixed yield in DeFi?
Fixed yield means you know exactly what return you'll earn before you deposit. Unlike variable APY protocols where returns fluctuate daily based on trading volume and market conditions, fixed yield protocols lock in your return at the time of deposit.
Fixed yield vs variable APY
| Feature | Fixed Yield | Variable APY |
|---|---|---|
| Return certainty | ✅ Known at deposit | ❌ Changes daily |
| Planning | ✅ Easy to forecast | ❌ Difficult |
| Upside | ❌ Capped at fixed rate | ✅ Can increase |
| Downside | ✅ Protected from drops | ❌ Can decrease to near zero |
How fixed yield is generated
Fixed yield protocols typically earn from one of two sources:
- Trading fees — providing liquidity to high-volume DEX pools generates predictable fee income
- Lending interest — lending to overcollateralised borrowers at fixed rates
Who benefits from fixed yield
Fixed yield is ideal for:
- Conservative DeFi users who want predictability over maximum upside
- Businesses that need to forecast returns for accounting purposes
- New DeFi users who want to understand exactly what they're getting into