Real Yield Vs Inflationary Yield

Real yield versus inflationary yield is a distinction between rewards generated from actual protocol usage and those generated through the issuance of new tokens. Real yield is sustainable, as it is derived from fees paid by users for services like trading, borrowing, or lending.

Inflationary yield is funded by increasing the total supply of the token, which can dilute the value of existing holdings if not balanced by growth. Investors prioritize real yield because it indicates a product-market fit and a sustainable business model.

Inflationary yield is often used as a temporary incentive to bootstrap growth but can become unsustainable if it does not lead to genuine adoption. Analyzing this distinction is critical for evaluating the long-term value accrual potential of a digital asset.

It helps distinguish between protocols that generate value and those that merely distribute supply.