To fully appreciate yield dollars, we’re going to start with a quick review of simple & compound interest. Then we’ll explain yield dollars and then give a few different DeFi examples from different crypto ‘ecosystems’. Simple Interest Simple interest is pretty straightforward, and it will likely be familiar to you. Imagine you’re lending somebody $100 for four years at 10% interest. They agree to pay interest of $10 each year and then repay in full at the end of the third year. At the beginning of the period you send them $100 (cash flow out). At the end of years one, two, and three they send you $10 interest (cash flow in). At the end of year four, they send you $10 interest, plus the $100 principle (cash flows in).
Yield Dollar: What? How?
Yield Dollar: What? How?
Yield Dollar: What? How?
To fully appreciate yield dollars, we’re going to start with a quick review of simple & compound interest. Then we’ll explain yield dollars and then give a few different DeFi examples from different crypto ‘ecosystems’. Simple Interest Simple interest is pretty straightforward, and it will likely be familiar to you. Imagine you’re lending somebody $100 for four years at 10% interest. They agree to pay interest of $10 each year and then repay in full at the end of the third year. At the beginning of the period you send them $100 (cash flow out). At the end of years one, two, and three they send you $10 interest (cash flow in). At the end of year four, they send you $10 interest, plus the $100 principle (cash flows in).