DeFi Yields Demystified: Real vs. Phantom APY

18% APY sounds attractive until you factor in impermanent loss, token dilution, and smart contract risk. Professional yield hunters separate real yield (fee revenue from protocol usage, paid in blue-chip assets like ETH or USDC) from phantom yield (native token incentives that inflate supply and dump on LPs). To evaluate a farm: 1) Check DefiLlama for protocol revenue vs. emissions. 2) Model IL using volatility assumptions for the pair. 3) Audit the contract’s risk profile (no admin keys? Timelocks?). Sustainable yield rarely exceeds 6-10% in major pairs. Higher returns are compensation for unspoken risks understand them before providing liquidity.