Composite yield strategies layer multiple DeFi protocols to maximize returns on your capital. By stacking yields from LP fees, lending, staking, and incentives, sophisticated users can achieve returns that far exceed any single strategy.
Common Yield Stacking Patterns
Pattern 1: LP + Lending Receipt
1. Provide liquidity → Get LP tokens 2. Deposit LP tokens as collateral → Borrow stablecoins 3. Use borrowed stables for more LP or lending Result: LP fees + lending yield + leverage
Pattern 2: Liquid Staking + LP
1. Stake ETH → Get stETH (earning staking yield) 2. LP stETH/ETH → Earn trading fees 3. Stake LP tokens → Earn additional incentives Result: Staking yield + LP fees + incentives
Key Takeaways
- Composite strategies stack multiple yield sources
- Higher yields come with compounded risks
- Always understand liquidation conditions
- Start simple, add layers as you gain experience
- Use yield aggregators for automated strategies