A compounded rate assumes rewards are reinvested continuously and frictionlessly forever, producing a peak figure no real depositor, facing fees and exits, ever collects.
Adept
The hidden part#0914
A compounded rate is a frictionless ceiling. It assumes costless, constant reinvestment forever — conditions no wallet meets.
A yield quoted in dollars looks safe, but if it is paid in a token whose price falls, the dollar figure at payout can be worth far less by the time you hold it.
Novice
The hidden part#0913
A dollar label fixes the display, not the asset. Paid in a falling token, your two hundred dollars can arrive worth less.
A high farm rate is a reward divided among depositors, so the moment a crowd discovers it and piles in, the same reward splits more ways and the rate falls.
Adept
The hidden part#0912
A farm’s high rate means few have found it yet. Finding it is what ends it; the crowd dilutes the rate it chased.
When returns are paid from incoming deposits rather than real earnings, the scheme has a recognisable shape: it must grow to survive and collapses when inflow slows.
Master
The hidden part#0910
If payouts come from new deposits, the shape is fixed: grow or die. The returns are real until the inflow stops.
A headline yield is often the gross rate before performance, gas and management fees, so the number displayed is not the number that reaches the depositor’s balance.
Adept
The hidden part#0909
The headline is the gross rate; your balance grows at the net. The fees are real and subtracted after the number sells.
A displayed rate that barely moves can sit on top of a wildly shifting base, because smoothing and averaging present a calm surface over a volatile underneath.
Adept
The hidden part#0908
A flat line can hide a shaking floor. Smoothing lowers the visible variance, not the real one you are standing on.
Staking rewards can look like earned income, but many are simply minted new tokens, so the payout dilutes the holder it pays rather than adding outside value.
Novice
The hidden part#0907
Printed rewards are not earned income. Minting to pay yield dilutes the holders it pays; the group gains nothing.
A yield earned for a single strong week can be quoted as an annual figure, stretching seven days of good conditions across a calendar that will not repeat them.
Adept
The hidden part#0906
A per-year figure can be one good week times fifty-two. The unit implies a year; the basis was seven lucky days.
The largest yield on a list often marks the smallest, riskiest pool, because a thin pool must offer more to attract capital and can collapse the fastest.
Master
The hidden part#0905
The top of a yield list is the front of the risk queue. A rate far above the rest is danger, priced.
A rate in the thousands of percent is funded by a temporary token incentive, so the eye-catching number lasts exactly as long as the subsidy paying for it.
Adept
The hidden part#0904
A four-figure rate is a subsidy with a countdown. It lasts exactly as long as the incentive pot funding it.
The term impermanent loss suggests a loss that reverses itself, but it only stays impermanent while you stay in the pool; withdrawing turns it permanent.
Novice
The hidden part#0903
Impermanent loss is impermanent only until you leave. Withdrawing at a diverged price makes the paper loss real.