Yield Bearing Tokens: Simplified: 🧵
1/ Yield-bearing tokens explained: they're designed to grow your crypto holdings over time by channeling real network activity back to you. Instead of just hoping prices rise, you earn programmatic yield from staking, protocol fees, or borrower interest.
2/ Why they matter:
• Protect against network inflation/dilution
• Simple to use: no hardware or complex strategies
• Maintain liquidity vs traditional lock-ups
3/ Two main designs:
• Rebase tokens: Your token balance increases over time (more units)
• Accrual tokens: Same token count, but each unit becomes more valuable
Each has different tax implications - know before you invest!
4/ Real examples from our ecosystem:
• iFIL: Generates yield when storage providers borrow FIL
• stICNT: Earns auto-compounding staking rewards across diverse node providers
Both offer simple "hold-to-earn" experiences.
5/ Important reminder: Yield is only part of your return. If the underlying token falls 20%, even a 10% yield won't save you from losses in your home currency. Measure results in the currency you actually spend!
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