In the DeFi sector, there are many platforms that allow users to earn yields on their digital assets without having to go through traditional intermediaries like banks or brokers.
By 2025, the sector has further evolved, and now DeFi platforms offer increasingly sophisticated opportunities to generate passive income through mechanisms such as lending, staking, liquidity provision, and yield farming.
How DeFi Generates Yields
DeFi (decentralized finance) is an ecosystem of blockchain-based financial applications that, unlike traditional finance (CeFi), is permissionless. This means that anyone can take advantage of it with their own anonymous and non-custodial wallet.
The yields generated by DeFi protocols stem from various activities, such as lending crypto assets to earn interest, providing liquidity to decentralized exchanges (DEXs), collecting fees, or staking to support network security in exchange for rewards.
The main mechanisms are:
- lending, or crypto loans in exchange for active interest
- staking, or participation in transaction validation
- liquidity provision, meaning the addition of one’s own crypto assets to DEX pools to facilitate swaps
- yield farming, which involves providing liquidity to DeFi protocols in exchange for rewards in the form of interest, fees, or governance tokens.
Sometimes these strategies can also be combined with each other, such as liquid staking, which allows you to maintain your liquidity even while locking up tokens for staking.
By 2026, average returns range from 3% to 20% per year for stable assets like stablecoins, but in some cases, they can exceed 100% in high-risk pools.
However, these rates can be significantly influenced by market volatility and the incentives of different protocols, and include risks such as impermanent loss, hacks, and price fluctuations.
Lending
Regarding decentralized lending, the most used platform is Aave.
This is one of the most established DeFi protocols, with a TVL of over $4.5 billion and support for as many as 9 chains, including, of course, Ethereum.
It is a platform that has been around for several years (since 2017), and it allows lending assets such as $ETH, $USDC, and DAI, earning interest. In 2026, it will introduce new features like flash loans and liquid leverage, ideal for advanced strategies.
To use Aave, you need to connect your wallet (typically MetaMask), deposit assets into a lending pool, and earn dynamic APYs based on demand.
For example, by lending $USDC, one can earn an APY (Annual Percentage Yield) ranging from 3.5% to 6%, while for $ETH it can reach 5-10%.
The risks involved are generally related to the vulnerability of smart contracts, but also specifically to liquidations if the collateral decreases.
It is also suitable for beginners thanks to a user-friendly interface and multi-chain support.
Other lending platforms include Compound, for autonomous lending, and Morpho for lending optimization.
Compound is similar to Aave, but with algorithm-based autonomous rates, while Morpho optimizes loans on Aave/Compound with blue-chip vaults.
Liquidity Provision
The most widely used DEX is undoubtedly Uniswap. Its recent V3 and V4 versions optimize yields with concentrated liquidity and custom hooks.
To earn yields on Uniswap, you need to provide liquidity to specific trading pairs, such as $ETH/$USDC, to collect fees ranging from 0.05% to 1% per swap.
Typical returns range from 5% to 20% for stable pools, but on volatile pools such as $USDC/WBTC on Optimism, they can reach up to 80.
The main specific risk, in addition to the generic ones, is related to impermanent loss, in the event of price divergence. However, this risk can be significantly reduced by avoiding pools with speculative tokens.
Uniswap boasts high liquidity and integrations with various wallets, and it is also well-suited for yield farming on popular pairs.
Staking
Liquid staking on Ethereum is dominated by Lido Finance, with a TVL of 13.9 billion. It allows staking of $ETH while receiving stETH in return for use in DeFi.
In fact, it is possible to yield stETH, for example by engaging in lending or farming, while continuing to stake $ETH.
Typical yields range between 4% and 8% on $ETH, but with a boost on wrapping (wstETH).
The specific risk is slashing (losses for offline validators), but it is rare.
Yield farming
Yearn Finance is one of the most utilized platforms for yield farming.
In fact, it moves assets between different protocols to maximize the APY.
A deposit is made into a vault, allowing the protocol to optimize its utilization.
Typical returns range between 5% and 15%, but can rise up to 60% in fixed vaults.
However, the risks in this case are greater because they depend on the numerous underlying protocols.
However, there is also Pendle Finance for yield trading.
Pendle indeed allows for the tokenization of yield, separating principal (PT) and yield (YT) for fixed or speculative strategies.
Additionally, Ethena should also be mentioned, as it enables synthetic yields on USDe.
Stablecoins
Finally, it’s also worth mentioning Curve Finance, a specialist in stablecoins.
Curve is indeed optimized for stable swaps with minimal slippage, making it ideal, for example, for yield farming on stablecoins.
Stablecoins are deposited into pools, staked, and LP, and rewards are received in $CRV.
Typical returns range from 10% to 30% for stable pools, but can exceed 100% with leverage on Yield Basis.
The greatest risk is the reliance on the volatility of the $CRV token.
General Risks
DeFi is not without risks.
Hacks are relatively frequent, especially on smaller or less proven protocols, and there are also rug pulls, particularly on newer ones.
It would be advisable to use hardware wallets, and especially to check the audits of the protocols to understand if they are secure. Additionally, it is always wise to diversify and not leave everything in one or a few protocols. It is also recommended to start with small amounts and to pay attention to the fees.
