Thread by @0xTosyn

Day 26 of 31 days of crypto/Defi terminologies

Yield Aggregator

What are yield aggregators, and how do they operate?

A thread 🧵

Yield aggregators are also called auto compounders or yield optimizers, and they play a crucial role in the yield economy by combining  different  defi protocols
and strategies to maximize investors' profit.

Let me explain what I mean by this, just like how these ponzi sites promised returns on investment. Then these resources are pulled together and invested in different businesses, as the case may be, and then returns are distributed to these guys based on the agreement made.

In this case, yield aggregators are a set of smart contracts that pool investors' crypto tokens and invest them in a portfolio(s) of yield-paying products and services through pre-programmed and automatically executed strategies.

It's more like having an account manager take care of an investment portfolio and provide the best Defi crypto stakings opportunities to obtain maximum profit.

Also, please take note that these yield aggregators have fees they charge and interest rates they provide.

✅ How does yield aggregators work?

The yield farming process typically expects participants to lock up their funds, and yield aggregators work by automating the farming process to produce the highest yields possible.

Yield aggregators combine the investment of various investors to facilitate different strategies while remaining and waiting to accumulate passive income since the yield automated services does it all for them.

Real-life terms like 'farm' are not used by chance.
A farm is a place where crops are grown to generate yield.

The same applies to yield farming in Defi, where farmers put their investment (crops) to generate profit which is also the yield in the farmers' real world.

Using these strategies, investors can move tokens around different platforms,  optimizing yields via auto compounding (talking about compound interest in my last thread).

This process allows stakers to claim and restate their rewards without the need to do it manually.

@iearnfinance is one of the yield aggregators on the Ethereum blockchain.

Another example of a yield aggregator is @harvest_finance

I hope you learnt  a thing or two from this thread

- That's all for today.

- Kindly follow @0xTosyn for more educational content.
#HappyNewYear2023 #31daysofdefiterms