Before we get started, this is not a recommendation or endorsement to buy any token mentioned.
The newest movement in DeFi is referred to as “real yield,” referring to yield backed mostly by user-generated fees. DeFi teams designing for long term, sustainable, real yield is clearly a reaction to what many of us experienced in 2020/2021, where newly created governance tokens created a frenzy of yield farmers incentivized to bootstrap liquidity in new DeFi protocols. The issue we ran into is these mechanisms not only failed to convert to loyal users, but in many cases, the race to farm and dump tokens led to major protocols suffering from low morale among token holders, as prices rapidly sold off, network valuations sunk, and previously advertised yield rates trended to zero.
With a focus on real yield, DeFi builders are working to translate more sustainable fee-driven business models like derivatives exchanges to decentralized on-chain protocols. While some of the protocols with the strongest product-market fit like Uniswap are generating revenue in the form of trading fees earned directly by LPs, many other protocols are working harder than ever to design fees which also accrue to the DAO treasury and/or get redistributed to token holders. A few trailblazers in this new era of building for real yield are below.
Synthetix, one of the OG DeFi protocols building for trading synthetic assets, has been working to integrate with more aggregators like 1inch to offer lower slippage for higher volume trades thanks to the design of Synthetix’s network debt pool. Increased trading fees are earned weekly by SNX stakers, who have rallied around yields exceeding 60% APY the last few months. Synthetix currently has one of the lowest P/S ratios among the DeFi