More tokens can still mean less money: read a yield number carefully

A yield percentage is not the same as profit in the currency you spend. You need to know what the rate measures, how rewards are paid, and what your assets could be worth when you leave.

Start with the unit

Are rewards paid in the asset you supplied, in another token, or as a changing claim on assets? A percentage that describes token growth cannot by itself tell you the cash result. The token’s price and the cost of converting it matter too.

APY means annual percentage yield. It describes an annualized result incorporating compounding under stated assumptions. It is not a promise that today’s displayed rate will remain available for a year. Ask whether the displayed number is a current estimate, a historical figure or a contractual term.

Also ask whether it includes incentives that end, fees charged by the provider or costs of claiming and reinvesting. A neat number can conceal several different assumptions.

A hypothetical example, not a forecast

Suppose you begin with 100 tokens priced at $10 each: a displayed value of $1,000. Later you have 110 tokens, but each is priced at $8. The new displayed value is $880. The token count increased by 10%; the displayed dollar value fell by 12% before costs and taxes.

Nothing in this invented example predicts a future price or rate. It simply separates two measurements. If the price had stayed at $10, the displayed value would instead be $1,100 before costs and taxes. Neither displayed value establishes what an actual sale would produce.

Ask where the money comes from

A useful explanation names the activity generating rewards and who bears a loss. “Passive income” is not an explanation. Ethereum’s pooled-staking documentation describes underlying staking penalties and additional token risks. Aave’s App disclosures describe lending-related yield and technological, financial and operational risks. These are different structures; a shared percentage format does not make them comparable investments.

Do not treat self-custody, an audit or a recognized brand as proof that every layer is safe. Identify the token, provider or contract, strategy and exit route separately.

A short rate-reading checklist

• Which asset is the rate measured in, and which asset pays the reward?
• What period does the number describe?
• Which compounding, fee and incentive assumptions does it use?
• Can the asset or reward lose value?
• Can you withdraw principal and rewards when needed?

For your own records, track units received separately from cash spent and cash realized. Taxes depend on your jurisdiction; avoid assuming that an unrealized cash loss removes an obligation arising when rewards were received.

Your next action

Rewrite the advertised rate in plain language: “This measures ___ over ___, paid in ___, before/after ___.” Leave blanks visible if you cannot verify them. Compare the full arrangement only after those blanks are filled.

Related guide: Include the full route costs when comparing a displayed percentage.

Sources and review

Checked 12 October 2026. Source dates describe underlying publications, not new events today. Provider documentation describes stated terms and does not prove safety or suitability.

• Ethereum: pooled and liquid staking — Current documentation; checked date below; Ethereum examples; not every network.
• Aave App risk disclosures — 12 July 2026; Aave App and its vault; not every Aave market.

General education, not a recommendation to buy, sell or use a provider. Crypto can lose value; access, fees and legal treatment vary. We review changing provider and legal details monthly, security fundamentals quarterly, and material known changes sooner. Material corrections are dated on the page.