YIELD OF DREAMS: Why Are DeFi Yields So High?

May 27, 2022

DID YOU KNOW? Generally, crypto investors can potentially generate twice – if not more than 10 times – the value of their initial investments if they use DeFi services or apps.

Does it surprise you? It shouldn’t.  

Welcome to the world of Decentralized Finance (DeFi)!

In this article, we unravel the mystery behind DeFi’s hard-to-believe but justifiable high yields. So, let’s dive in!


  • DeFi: The Great Disruptor
  • So, Why Are DeFi Yields High?


Truly, it’s not surprising that people who have just wandered into DeFi would think that DeFi platforms are ponzi schemes or some kind of a scam. For what reason? Mainly, because each is offering a promise of high yields and returns.

To be fair, this assumption is sometimes correct –– which is why we always advise crypto investors to do their own research, and why providing security and transparency to our users are paramount for us at Cake DeFi as well.

That said, our take is that this surprise or apprehension really stems from the fact that most people are used to the earnings and interests that Traditional Finance (TradFi) offers. For example, banks nowadays would pay you an interest rate of just around 0.3% to 0.5% for lending them your funds by opening a savings account with them.

So, wouldn’t it be a complete shock for anyone to find out that DeFi platforms offer more than 10 times of those rates? Of course, it would be. But, it is exactly why DeFi is not only touted as a disruptor of TradFi but also one of the key innovations to have come out of the digital space.


Still, the question remains: Why are DeFi yields so high? A simple answer is that yields are often high at the very beginning of every project. Why? Because, normally, the number of platform users are few. In time, as more and more people use the platform, the yields tend to decrease.

That said, there are other quantifiable factors that drive high yields, which includes:

  • Blockchain emission rates
  • Amount of people participating in the platform (particularly in Staking and Liquidity Mining)
  • Specific rewards allocation of Liquidity Mining pools
  • Performance of blockchain’s native token

It should be noted, however, that these factors vary from platform to platform.

In summary, these yields or rewards are hard coded in order to maintain a deflationary ecosystem. Why? The goal is to attract more users or participants to enable the platform to thrive, be more decentralized and stable, and – ultimately – to survive.

Our role as an aggregator of DeFi apps and services is to seek, assess and provide access to investment opportunities that would ultimately benefit our users - not just in terms of high yields but also security and transparency. If you want to take advantage of these benefits but are not yet a registered Cake DeFi user, you may click here to sign up and start generating passive income with us.

You will get US$30 worth of DFI when you register successfully and make a deposit of US$50 or more, and allocate the amount for at least 28 days into either our Lending, Staking Freezer or Liquidity Mining Freezer service.

To know more about the many benefits and advantages of using Cake DeFi, you may check out our blog section or FAQ section.


Control your financial destiny. Bake is the most transparent, safe and easy way to invest in DeFi and Web3.

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