@enidbobby

DeFi yield fluctuations can reflect shifts in market risk appetite, but interpretation requires nuance. Rising yields often signal higher demand for borrowing or reduced liquidity supply, which can occur in bullish, risk-on environments. Conversely, falling yields may suggest reduced borrowing demand or increased lending supply, often associated with risk-off sentiment. However, yield changes can also result from protocol-specific incentives, liquidity mining campaigns, or governance decisions unrelated to macro sentiment. Cross-referencing yield trends across multiple protocols and chains, along with stablecoin market share and trading volumes, provides a clearer picture. While not a perfect predictor, sustained yield trends—especially in major lending markets—often precede broader market moves, making them a valuable component in a multi-factor sentiment analysis.

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