# Yield - If It Sounds Too Good to Be True By [Lista DAO](https://blog.lista.org) · 2026-07-02 defi, lending, farming, yield, bnb, lista, moolah --- Dev showed up at the kissaten with his phone already out. "Look at this," he said, before he'd even sat down. "Twelve thousand percent APY. _Twelve thousand_ on a stablecoin pool. Stablecoins, Priya. There's no impermanent loss. Nothing to go down. It's just sitting there making money." He thrust the phone at me. The screen showed a webpage with a lot of purple gradients and a number - _12,432% APY_ - flashing in a way I associated with adult-store advertising. A small cartoon dog mascot was holding a stack of coins. A countdown timer was running. I looked at Moolah. She was looking at the phone with the expression of a doctor reading an X-ray of a small bird. "Dev," she said. "Sit down." He sat down. "I want you to read me, out loud, the disclaimer at the bottom of that page." He scrolled. He squinted. He read: "_Rewards are paid in DOGI tokens. APY is variable and based on current emission rates. Past performance does not guarantee future returns._" "Stop. Read the second sentence again." "_APY is variable and based on current emission rates._" "Now," Moolah said, "tell me what _emission_ means." "Like… new tokens being minted?" "Yes. The pool is paying you twelve thousand percent in DOGI tokens. Tokens that the protocol is creating, out of thin air, and handing to depositors. The yield is real in the sense that you receive the tokens. The tokens are real in the sense that they exist and have a price. But the _value_ of the yield depends entirely on whether the tokens are worth anything when you go to sell them." "And are they?" "Let's find out together." She gestured at the phone. "What's the chart look like?" Dev tapped over to the price chart. We all looked. The DOGI token, six months ago, had been worth seventy cents. It was now a half cents. The chart looked like a slide on a playground that had been shoved into the ground at one end. "Oh," Dev said. "There it is. Twelve thousand percent annual yield, paid in a token that has lost ninety-eight percent of its value in six months. Your _real_ return, denominated in dollars or stablecoins, is enormously negative. The advertised yield is theatrically large. The actual yield is a hole. This is the central trick of high-APY DeFi, and it is run, in slightly different costumes, all over this industry, on every chain, every week." I leaned in. "Explain why this happens. From the protocol's side." Moolah settled in. The kissaten owner, without being asked, slid a small dish of senbei onto our table, glanced once at the phone, and walked away with the small head-shake of a man who had seen this exact conversation play out before. "A new protocol launches," Moolah said. "It needs liquidity. It needs people to deposit money so the protocol has something to _do_. It has no track record, no users, no organic demand. So it does the only thing it can do - bribing people to show up. It mints a token of its own creation, and offers that token as a reward for depositing. The bigger the reward it advertises, the more depositors come, the more locked-up assets it can claim, the better it looks in the rankings, the more press it gets." "But the rewards are just tokens it's printing?" "Tokens it's printing. The protocol has not earned anything. It hasn't generated any revenue. It has simply created a coupon and given the coupon to depositors. The coupon is tradable with a price, set by whoever is willing to buy it on the market. As long as new buyers keep showing up faster than recipients dumping their tokens, the price holds. The yield, denominated in dollars, looks great." "And when new buyers stop showing up?" "The price collapses. Recipients dump faster than buyers buy. The yield, in dollar terms, evaporates. Often the yield in _token_ terms also collapses, because the protocol responds by minting _more_ tokens, in a doomed attempt to keep the headline number high. The protocol drowns in its own coupons. Depositors withdraw. The whole thing winds down. A few people made money - early entrants who dumped their rewards immediately. Most people lost. The protocol declares victory, says it's pivoting to its 'real product,' and the cycle restarts somewhere else with a different mascot." "So the question is -" "The question is always: _where is the yield actually coming from?_ And there are only a few honest answers." She lifted three fingers. "One. _Trading fees._ People are paying to use the protocol, and a slice of those fees flows to depositors. This is real yield. It can be modest, but it's sustainable. The pools last week with the buckets have been generating this kind of fees for years." "Two. _Borrowing interest._ Borrowers are paying interest on their loans, and depositors receive a slice. Also real. Lending protocols like the one we discussed a few weeks ago." "Three. _Network rewards._ On a Proof of Stake network, validators earn ether for their work. That's real yield, paid by the protocol itself, sustainably, because it's the cost of network security. Native and honest" "And the fourth category -" "The fourth category is _inflation._ New tokens being minted to attract or retain capital. This is dilution disguised as a reward. Granted, some protocols are going easy on printing tokens and actually doing something meaningful. But sometimes there is nothing underneath, and the inflation _is_ the product. Telling these apart is most of the work." "How do you tell?" "You ask three questions. _Where does this protocol earn money? How much does it earn? And how much of that earning is being shared with token holders, versus how much is being created out of nothing?_ If the protocol cannot give you a clear answer to those questions, the yield is a fairy tale." I wrote that down. _Three honest sources of yield: trading fees, borrowing interest, network rewards. The fourth, inflation, is a fairy tale unless backed by real revenue._ Dev was scrolling through other pages. "There's another one here that's saying eighty thousand percent." "Whatever it's paying you," Moolah said, "is being paid in a token they printed this morning. Look at the price chart. Look at six months ago. Look at the volume and how many addresses are holding it. If the answer to any of those is _bad,_ the answer to the yield question is _fake._" "It's musical chairs," I said. "But the chairs are being added by the protocol every minute, and the music never stops, only the price of the chairs goes down." Moolah looked at me for a long moment. "That is," she said, "the best description of this category I have heard in years. Write it down." I wrote it down. _Musical chairs where new chairs are added every minute. The chairs lose value faster than the music can keep up._ "There is an old piece of wisdom," Moolah said, "from the South Sea Bubble, in 1720. A pamphlet circulated in London advertising shares in _a company for carrying on an undertaking of great advantage, but nobody knew what it was._ The pamphleteer disappeared with the deposits within a week. People paid him real money to participate in something he refused to describe. Three hundred years later, we have wrapped this same idea in better fonts and added a cartoon dog. The fonts are different. The undertaking is still nobody-to-know-what-it-is. The pamphleteer still leaves on Friday." She produced a small piece of senbei. She ate it. The kissaten owner, somewhere across the room, noticed and pretended not to. "So how do I make actual money?" Dev asked, smaller now. "Slowly," Moolah said. "And boringly. The yield that lasts is the yield that comes from someone actually paying for a service the protocol provides. That yield will look, to your eye, embarrassingly small. Three percent. Five percent. Sometimes seven. The yield that looks exciting is almost always the yield that ends up costing you money. Real yield is boring. And boring is what you want. If you find yourself getting _excited_ by the number, that's the moment to stop and ask which kind of yield it is." Dev put his phone in his pocket. I closed my notebook. The snow outside was lighter now - almost stopped. The old man behind the counter slid another coffee in front of Moolah, this time without her even being noticed to ask. "Not all yield is theft," Moolah said, "but most spectacular yield is theft eventually. Write that down too." I did. --- *Originally published on [Lista DAO](https://blog.lista.org/yield-if-it-sounds-too-good-to-be-true)*