Whether you’re a seasoned professional implementing complex strategies or just getting started today, yield is fundamentally the same.

It’s what you get for putting your capital to work. And, be it in TradFi or DeFi, you need to understand certain core concepts to make the most of yield-earning opportunities (or, for that matter, to navigate challenges).

Let’s break them down in simple, accessible terms.

No matter where or how, yield prices risk. Every yield-earning opportunity sits somewhere on the risk-return ladder. And typically, the higher you go, the more yield you get.

Sovereign bonds, such as U.S. Treasuries, are at the bottom of this ladder in TradFi. Whereas in DeFi, native Layer-1 staking—say, on Ethereum or Solana—occupies this position. They’re considered the baseline, delivering the lowest but also often the safest, a.k.a. ‘risk-free’ yields.

One step above, there are traditional corporate bonds or lending protocols, such as Aave. They offer higher yields because you’re accepting credit or liquidity provisioning risks, respectively.

And if you’re seeking even higher APYs, high-yield “junk” bonds or layered strategies with 12+ asset classes or 5+ DeFi protocols are your option. The risks, of course, are proportionally higher. So much so that these aren’t viable for the majority of yield-seekers worldwide.

Overall, when a system offers higher yields, it essentially does one of two things: involves higher risks or generates yield out of thin air.

This is where it gets interesting. It’s also where most people get confused.

Broadly, there are really only two key sources of yield in any financial system: revenue or activity-based and inflation or emission-based. The former is usually sustainable; the latter isn’t.

More often than not, corporate bond issuers pay holders from operating profits generated by deploying the capital raised through such bond sales. Ideally, sovereign bonds work in a similar way, but they’re more dependent on central bank policy.

In DeFi, real, activity-based yields largely come from protocol fees or from interest paid by borrowers. Seasons, for instance, generates yield from the 10% transaction fees collected every time someone buys or sells $SEAS.

Fee-based models thus produce yield from genuine economic value and, as with Seasons, they can work independently of short-term market dynamics. That’s why they are sustainable.

Emission-based models, on the contrary, pay yield by printing more of the yield-payout assets (tokens, currency notes, or any equivalent instrument). And the more they pay, the less valuable your yield becomes.

So, whenever you’re evaluating any yield-bearing system, ask this simple question: Where is the yield coming from? If the answer is inflation or emission (and that alone), RUN!

Longer commitments command higher yields. TradFi’s ‘duration’ roughly corresponds to lockups and vesting schedules in DeFi.

That’s why, under ‘normal’ circumstances, a 10-year U.S. Treasury bond pays more yield than its 2-year counterpart. Likewise, in DeFi, staking APY is higher when you lock up your tokens for a year rather than for 30 days. You’re giving up flexibility for a longer period, after all.

The underlying principle here is that capital has time value.

Capital today is worth more than capital tomorrow, much like the bird in hand than the one in the bush. And the funds you locked up in that long-term bond or staking pool, you could have used them elsewhere to leverage other opportunities. Which brings us to the next concept: opportunity cost.

The thing is, for every yield-bearing instrument you choose, you’re saying no to alternatives and, more importantly, to other opportunities that might arise during the time your money is locked up.

You must be compensated for this, and usually, you are, through higher long-term yields. Still, before deploying capital into any system (yield-bearing or otherwise, in fact), consider what else you could be doing with it. Then demand adequate compensation.

Every yield-seeker starts somewhere, and most start small. Those who win in the long run, however, are the ones who let compounding do its work.

There’s a lot of math and philosophy behind how this works, but at the most basic, practical level, think of it as earning yield on yield.

As with every other concept we discussed so far, compounding applies to both TradFi and DeFi.

The mechanics, though, differ significantly. Especially insofar as DeFi’s programmability and composability (i.e., the ability to stack yields across protocols) took compounding to a whole new level. It also enabled a degree of automation that was unthinkable in legacy systems.

That said, the real beauty and power of compounding lies in its invisibility. It doesn’t seem like much at first, but it adds up over time. And after a certain point, your yield can grow exponentially, even if the APYs or rates remain the same.

Nevertheless, it’s worth noting in this context that while compounding can increase the yield you earn over long enough timeframes, stacking DeFi yields (or implementing multi-asset TradFi strategies) mostly entails higher risks. The risk-return ladder? It’s everywhere, literally.

TradFi and DeFi have more overlap and parallels than we usually realize. And they’re becoming increasingly more intertwined.

Tokenized treasuries and other real-world assets now exist onchain. DeFi is emerging from its unrealistic and unsustainable era in which emission-led protocols promised 100–1000% APYs, only to deliver 99% decay and steady, chronic compression.

Serious institutional capital is flowing into crypto, creating even greater demand for sustainable models in which yield comes from genuine economic activity rather than rampant token printing or mere speculation, as we documented in our State of Yield 2026 report.

So, against the backdrop of this ongoing TradFi-DeFi convergence, you must ask the same questions whether you’re evaluating a Treasury bond or an onchain lending protocol:

• Where am I on the risk-return ladder?

• Where is this yield coming from?

• What’s my time commitment and opportunity cost?

• Can I compound my yields without taking too much additional risk?

…and so on.

Earning yield isn’t complicated. It shouldn’t be.

Especially now that you know what to look for, it really only boils down to asking the right questions and making the right trade-offs in ways that suit your risk and complexity tolerance.

TradFi or DeFi, the framework remains the same: understand the source, assess the risk, compare alternatives, earn yield. Or, better, just hold 10,000+ $SEAS and start earning simple, sustainable yields on Seasons.

Join us in transforming global yields with Yield 3.0.

General Resources: 🌐 Website | ✳️ LinkTree | ⚫ Beacons | 📃 Docs

Connect with the Seasons community: X (Twitter) | Telegram | Youtube | LinkedIn | Substack | Medium

Originally published: https://seasons.wtf/blog/yield-fundamentals-from-tradfi-to-defi

Whether you’re a seasoned professional implementing complex strategies or just getting started today, yield is fundamentally the same.

It’s what you get for putting your capital to work. And, be it in TradFi or DeFi, you need to understand certain core concepts to make the most of yield-earning opportunities (or, for that matter, to navigate challenges).

Let’s break them down in simple, accessible terms.

No matter where or how, yield prices risk. Every yield-earning opportunity sits somewhere on the risk-return ladder. And typically, the higher you go, the more yield you get.

Sovereign bonds, such as U.S. Treasuries, are at the bottom of this ladder in TradFi. Whereas in DeFi, native Layer-1 staking—say, on Ethereum or Solana—occupies this position. They’re considered the baseline, delivering the lowest but also often the safest, a.k.a. ‘risk-free’ yields.

One step above, there are traditional corporate bonds or lending protocols, such as Aave. They offer higher yields because you’re accepting credit or liquidity provisioning risks, respectively.

And if you’re seeking even higher APYs, high-yield “junk” bonds or layered strategies with 12+ asset classes or 5+ DeFi protocols are your option. The risks, of course, are proportionally higher. So much so that these aren’t viable for the majority of yield-seekers worldwide.

Overall, when a system offers higher yields, it essentially does one of two things: involves higher risks or generates yield out of thin air.

This is where it gets interesting. It’s also where most people get confused.

Broadly, there are really only two key sources of yield in any financial system: revenue or activity-based and inflation or emission-based. The former is usually sustainable; the latter isn’t.

More often than not, corporate bond issuers pay holders from operating profits generated by deploying the capital raised through such bond sales. Ideally, sovereign bonds work in a similar way, but they’re more dependent on central bank policy.

In DeFi, real, activity-based yields largely come from protocol fees or from interest paid by borrowers. Seasons, for instance, generates yield from the 10% transaction fees collected every time someone buys or sells $SEAS.

Fee-based models thus produce yield from genuine economic value and, as with Seasons, they can work independently of short-term market dynamics. That’s why they are sustainable.

Emission-based models, on the contrary, pay yield by printing more of the yield-payout assets (tokens, currency notes, or any equivalent instrument). And the more they pay, the less valuable your yield becomes.

So, whenever you’re evaluating any yield-bearing system, ask this simple question: Where is the yield coming from? If the answer is inflation or emission (and that alone), RUN!

Longer commitments command higher yields. TradFi’s ‘duration’ roughly corresponds to lockups and vesting schedules in DeFi.

That’s why, under ‘normal’ circumstances, a 10-year U.S. Treasury bond pays more yield than its 2-year counterpart. Likewise, in DeFi, staking APY is higher when you lock up your tokens for a year rather than for 30 days. You’re giving up flexibility for a longer period, after all.

The underlying principle here is that capital has time value.

Capital today is worth more than capital tomorrow, much like the bird in hand than the one in the bush. And the funds you locked up in that long-term bond or staking pool, you could have used them elsewhere to leverage other opportunities. Which brings us to the next concept: opportunity cost.

The thing is, for every yield-bearing instrument you choose, you’re saying no to alternatives and, more importantly, to other opportunities that might arise during the time your money is locked up.

You must be compensated for this, and usually, you are, through higher long-term yields. Still, before deploying capital into any system (yield-bearing or otherwise, in fact), consider what else you could be doing with it. Then demand adequate compensation.

Every yield-seeker starts somewhere, and most start small. Those who win in the long run, however, are the ones who let compounding do its work.

There’s a lot of math and philosophy behind how this works, but at the most basic, practical level, think of it as earning yield on yield.

As with every other concept we discussed so far, compounding applies to both TradFi and DeFi.

The mechanics, though, differ significantly. Especially insofar as DeFi’s programmability and composability (i.e., the ability to stack yields across protocols) took compounding to a whole new level. It also enabled a degree of automation that was unthinkable in legacy systems.

That said, the real beauty and power of compounding lies in its invisibility. It doesn’t seem like much at first, but it adds up over time. And after a certain point, your yield can grow exponentially, even if the APYs or rates remain the same.

Nevertheless, it’s worth noting in this context that while compounding can increase the yield you earn over long enough timeframes, stacking DeFi yields (or implementing multi-asset TradFi strategies) mostly entails higher risks. The risk-return ladder? It’s everywhere, literally.

TradFi and DeFi have more overlap and parallels than we usually realize. And they’re becoming increasingly more intertwined.

Tokenized treasuries and other real-world assets now exist onchain. DeFi is emerging from its unrealistic and unsustainable era in which emission-led protocols promised 100–1000% APYs, only to deliver 99% decay and steady, chronic compression.

Serious institutional capital is flowing into crypto, creating even greater demand for sustainable models in which yield comes from genuine economic activity rather than rampant token printing or mere speculation, as we documented in our State of Yield 2026 report.

So, against the backdrop of this ongoing TradFi-DeFi convergence, you must ask the same questions whether you’re evaluating a Treasury bond or an onchain lending protocol:

• Where am I on the risk-return ladder?

• Where is this yield coming from?

• What’s my time commitment and opportunity cost?

• Can I compound my yields without taking too much additional risk?

…and so on.

Earning yield isn’t complicated. It shouldn’t be.

Especially now that you know what to look for, it really only boils down to asking the right questions and making the right trade-offs in ways that suit your risk and complexity tolerance.

TradFi or DeFi, the framework remains the same: understand the source, assess the risk, compare alternatives, earn yield. Or, better, just hold 10,000+ $SEAS and start earning simple, sustainable yields on Seasons.

Join us in transforming global yields with Yield 3.0.

General Resources: 🌐 Website | ✳️ LinkTree | ⚫ Beacons | 📃 Docs

Connect with the Seasons community: X (Twitter) | Telegram | Youtube | LinkedIn | Substack | Medium

Originally published: https://seasons.wtf/blog/yield-fundamentals-from-tradfi-to-defi