@gndtxsfbwod.base.eth

Step-by-Step Breakdown of a DeFi Protocol's Yield Sources (Using a generalized example; actual mechanics vary by protocol) Lending & Borrowing Interest Mechanism: Users deposit assets (e.g., USDC, ETH) into a lending pool. Borrowers take loans against collateral, paying interest. Yield Source: Interest payments from borrowers. Example: A borrower pays 5% APR on a USDC loan; 4.5% is distributed to lenders, 0.5% goes to the protocol. Trading Fees from Liquidity Pools Mechanism: Users provide liquidity (e.g., ETH-USDC pair) to an automated market maker (AMM). Traders pay fees to swap tokens. Yield Source: Fees collected from swaps (e.g., 0.3% per trade in Uniswap). Distribution: Fees are split among liquidity providers (LPs) proportional to their pool share. Protocol Revenue Sharing

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