Module 06 — DeFi: staking, lending and yields¶
Goal: understand where yield in crypto actually comes from, tell real yield apart from an unsustainable scheme, and learn the risks specific to DeFi (which are different from, and additional to, price risk).
🔊 Listen to this module (Spanish audio, 10 min 33 s)
Narrated version of the full module — perfect for reviewing while you do something else.
Rule to start with¶
Always ask: where does the yield come from? If nobody can explain to you who pays that yield and why, the yield is you (your deposit is someone else's exit liquidity). Anchor/LUNA paid a "stable 20%" until May 2022; it collapsed with $40B+ in losses.
1. Legitimate sources of yield¶
| Source | Mechanism | Typical yield | Extra risk |
|---|---|---|---|
| Staking (PoS) | Validate the network; you're paid issuance + fees | ETH ~3%, SOL ~7% | Slashing, lock-ups |
| Liquid staking | You stake and receive a liquid token (stETH, jitoSOL) | similar | Protocol risk + depeg of the liquid token |
| Lending | You lend on Aave/Compound to over-collateralized borrowers | 2-10% on stables | Smart contract, bad collateral |
| Liquidity providing (LP) | You deposit pairs into a DEX (Uniswap); you earn trader fees | variable | Impermanent loss (below) |
| T-bill stablecoin yield | Stables backed by US debt that pass the interest through | ~4-5% | Issuer, regulation |
Native staking: crypto's "base" yield¶
- In PoS, staking is like the "government bond" of that network. ETH ~3%: partly new issuance, partly real fees.
- Watch out: if the network's inflation is 8% and staking pays 7%, your REAL return is negative — you're just diluted more slowly than someone who doesn't stake.
Impermanent loss (IL) — the hidden tax of being an LP¶
When you provide liquidity for a pair (e.g. ETH/USDC) and one of the assets moves a lot relative to the other, you end up with less value than if you had simply held both. The fees you collect must beat the IL for the LP to be profitable. For a beginner: only LP stable pairs (USDC/USDT), or don't LP at all.
The other side: borrowing can get you liquidated¶
So far you've seen lending from the good side: you deposit USDC, you get paid interest, you watch your position grow. But in the table there's a line that says "over-collateralized borrowers." Sooner or later you'll want to be THAT borrower: put up your ETH as collateral and pull out stablecoins without selling it. That's where the trap is.
- Analogy: an automated pawnshop. You leave your ETH as a pledge and they give you stablecoins. The difference from a human pawnshop is that here, if your ETH drops in value, a bot sells your pledge without warning you or asking you.
- The health factor, with numbers. You deposit $1,000 in ETH. The protocol lets you pull out at most ~80% ($800), based on that asset's LTV (loan-to-value). If you only pull out $400, you have plenty of room: ETH can fall a lot before there's any problem. If you pull out $750 (almost the max), any ~10% drop in ETH liquidates you, because your collateral no longer covers the debt.
There's no margin call. There's no phone call. There's a bot.
On an exchange they sometimes warn you before liquidating you. In DeFi they don't. It's code that runs 24/7 on the blockchain, with no human counterparty. It can liquidate you at 3 a.m. while you sleep, in an overnight dip, in seconds. And on top of that it charges a toll: the liquidator bot keeps an extra 5-10% of your collateral as a reward for doing the work. You don't just lose from the price drop: you lose that additional penalty.
Rule for beginners: LEND (deposit), but DON'T BORROW. Borrowing only makes sense in advanced cases (taking on leverage, or not selling to avoid the tax of a sale) and multiplies your risk. As a beginner, stay on the side that collects interest, not the side that can get liquidated.
2. Risks specific to DeFi (these add to price risk)¶
- Smart contract risk: one bug = drained funds. Hundreds of hacks, billions lost. Mitigate: veteran protocols (years in production), audited, with high TVL (Aave, Uniswap, Lido).
- Oracle risk: protocols read prices from oracles (Chainlink); manipulating them enables exploits.
- Depeg: a stablecoin or liquid staking token that loses its parity (UST→0; stETH traded 7% below in 2022; USDC touched $0.87 in 2023 because of SVB).
- Governance/admin-key risk: if a team can upgrade the contract, they can (or can be forced to) change it.
- Accumulated approvals: every time you use a protocol you approve access to your tokens. Review and revoke them periodically at revoke.cash (module 1).
3. Stablecoins, seriously¶
| Type | Example | Backing | Key risk |
|---|---|---|---|
| Fiat-backed | USDC, USDT | Dollars/T-bills with a custodian | Centralized issuer, freezable, regulation |
| Crypto-collateralized | DAI | Over-collateralized with crypto (150%+) | Collateral collapse, complexity |
| Algorithmic | UST (†2022) | Arbitrage mechanism with no backing | Death spiral. Avoid the whole category |
For a beginner: USDC/USDT to operate with; don't keep your entire net worth in a single stablecoin.
4. A safe, practical flow to get started in DeFi¶
- Hot wallet (Rabby) with a small amount — practice, not investment.
- A cheap network to learn on (Base, Arbitrum): Ethereum L1 gas makes mistakes expensive.
- First contact: a small swap on Uniswap. Notice: approval + swap = 2 separate transactions. Understand what you're signing in each one.
- Second: deposit 20-50 USDC into Aave. Watch your position grow. Withdraw.
- Staking: if you have ETH for the long term, liquid staking on Lido/Rocket Pool — understanding the depeg risk of stETH.
- Do not use protocols that are days old just because they pay 400% APY. That APY is the issuance of a token that's being hyperinflated; the first in get paid, the last in pay.
5. How to evaluate a DeFi protocol (checklist)¶
- Years in production without a hack?
- Audits from well-known firms (Trail of Bits, OpenZeppelin)? An active bug bounty?
- TVL > $100M and stable?
- Does the yield come from real revenue (fees, interest) or from issuing its own token?
- Identifiable team? Admin keys with a timelock/multisig?
- What happened to its token and TVL in the last bear market?
Exercises¶
- On DefiLlama, list the 5 protocols with the most TVL. For each one: what does it do, and where does its yield come from?
- Compare the APY of USDC on Aave vs the yield of a 3-month US T-bill. What does the difference (or the lack of one) tell you about the risk?
- With a testnet wallet (Sepolia): do a swap on Uniswap and a deposit on Aave testnet. Zero risk, full mechanics.
- Research the UST/LUNA collapse (May 2022): what Anchor promised, where the 20% "came from," and what triggered the spiral. Write 10 lines in
notas/caso-luna.md. It's the cheapest vaccine against the next scheme.
Checkpoint ✅¶
- What is THE question you ask in front of any yield?
- What is impermanent loss, and when does it matter?
- Three risk differences between holding USDC in a wallet and lending it on Aave?
- Why is a 400% APY on a new protocol a mathematical trap?
- Which type of stablecoin collapsed in 2022, and why was the design fragile?
- If you deposit ETH as collateral and borrow stablecoins, what happens if ETH falls hard in the middle of the night?
→ Next: Module 07 — Practical plan