What are acceptable levels of DeFi premiums and yields right now?

I’m trying to get an idea of what the community thinks about how to price DeFi products that on the one hand generate enough yield to be attractive to Liquidity Providers/miners, but not too expensive as to put off most people buying the product or service.

If last year taught us anything it’s that ridiculous multi-digit yields are unsustainable and probably a bit of a ponzi, right?

So, given this, if you accept that sustainable yields MUST be derived ONLY from real premiums paid by users who buy the product (not topped up with native tokens or inflation) what would you say is a good level of premium (and thus yield) for a DeFi product which would make it attractive to use?

For example….

2%? – maybe a good premium, would this attract sufficient numbers of LPs?
5%? – would this be a good balance which would attract both users and LPs?
8%? – Might be good for LP’s but is this getting to be too high a premium someone would pay?

What’s your thoughts?

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1 thought on “What are acceptable levels of DeFi premiums and yields right now?”

  1. I think a yield between 5-8% is generally attractive enough. You want it to be greater than staking, too low and they’ll just go there. But I do agree the cap of the return should be generally low and reasonable. Enough with 10%+ yields that are clearly not sustainable. We need to normalize standard yield rates so people don’t think 10-20% are normal. In the past, a 7-9% /year gain on the SPY was expected over the course of the last few decades. I think that’s a fine benchmark to target.


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