How do Yield optimizers work on LP’s

I’m noticing that LP yields on yield optimizer sites have high yields on various Liquidity pools. How do these work? I get that sometimes protocols give governance tokens or other rewards for using protocols, but the high yield rates seem to be higher than this, right?

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4 thoughts on “How do Yield optimizers work on LP’s”

  1. I’m not too familiar with yield rewards on yeild optimizer cause I participate in few LM program and my favorite is the UDO/USDC pool that is offering about 120%APY returns

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  2. There’s two components of the typical LP yields,

    1. LP Trx fees
    2. LP Farming rewards (available in Pancakeswap, spookyswap and sushiswap)

    Yield optimizers generally works by auto-compounding the farming rewards however some others do more complex techniques like leverage or multi cycle derivatives. Anyway, check out my YO at [happyhippo.farm](https://happyhippo.farm) only for PCS LPs.

    Edit

    If the APYS are too crazy like >1,000% APY this usually means the YO is minting its own token and use that to reward you hence the high APYs, though usually the YO reward token crash to 0 in a relatively short time. An example of this is [defihippo.finance](https://defihippo.finance)

    So two hippos, one is the good hippo the other is the bad hippo. đŸ™‚

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