What is a Yield Aggregator?
A yield aggregator is a DeFi protocol that automatically deposits user funds into the highest-yielding strategies across multiple platforms. Instead of manually moving assets between protocols, users deposit into aggregator vaults that optimize returns programmatically.
How Yield Aggregators Work
- Deposit: User deposits single asset into vault
- Strategy Deployment: Vault allocates to yield strategies
- Harvesting: Protocol claims rewards regularly
- Compounding: Rewards reinvested automatically
- Rebalancing: Capital shifted to better opportunities
- Withdrawal: User exits with original asset plus gains
Key Features
- Auto-compounding: Maximize compound interest effect
- Gas Optimization: Socialize harvesting costs
- Strategy Research: Experts identify opportunities
- Risk Management: Diversification across strategies
Major Yield Aggregators
- Yearn Finance: Original DeFi yield aggregator
- Beefy Finance: Multi-chain with hundreds of vaults
- Convex Finance: Curve-focused optimization
- Sommelier: Actively managed DeFi strategies
- Harvest Finance: Auto-compounding strategies
Strategy Types
- Lending optimization (Aave, Compound)
- LP token farming
- Staking rewards
- Leveraged strategies
- Delta-neutral positions
Fee Structures
- Performance Fee: 10-20% of profits
- Management Fee: 0-2% annually
- Withdrawal Fee: Usually 0-0.5%
- Deposit Fee: Usually 0%
Benefits
- Passive yield optimization
- Gas cost savings
- Expert strategy management
- Automatic rebalancing
Risks
- Smart contract risk (aggregator + underlying)
- Strategy risk and potential losses
- Dependency on strategist quality
- Fee erosion of returns