Onchain Yield Field Guide

§ 01 Executive Snapshot

• What: An exploration of onchain yield dynamics in the crypto space and the complexities involved.
• Who: Key players include Robinhood, Coinbase, and various DeFi protocols.
• Why it matters: Understanding the risks and structures behind onchain yields is crucial for investors to make informed decisions.

§ 02 Key Developments

• Robinhood has launched Robinhood Earn, allowing users to lend USDG at an estimated 7% APY.
• Coinbase enables lending of USDC through Morpho vaults curated by Steakhouse Financial.
• The article emphasizes that displayed yields often come from multiple sources, such as borrower interest and token incentives.

§ 03 Strategic Context

• The yield landscape in DeFi is often more complex than in traditional finance, with various risk factors and return drivers.
• Historical trends show that onchain yields surged with increased speculative appetite and financial activity within the crypto market.

§ 04 Strategic Implications

• Investors need to be cautious as high yields can lead to compressed returns when capital influx increases.
• A diversified approach to onchain yields can mitigate risks associated with market volatility and yield sustainability.

§ 05 Risks & Constraints

• Significant risks include the potential for yield compression due to increased capital supply without corresponding demand.
• The complexity of DeFi yields can lead to misinterpretation of risk, especially for less experienced investors.

§ 06 Watchlist / Forward Signals

• Future developments in the DeFi space may include new yield products and changes in market dynamics affecting yields.
• Monitoring the performance of onchain yield products will be essential to gauge the sustainability of returns and risk levels.