Recently, people have been asking me again why the APY of certain yield aggregators is so attractive… To put it simply, APY isn’t something that falls from the sky. Behind it are how the contracts are arranged, where the money ultimately ends up, and who you’re standing against as your counterparty. On the surface, it’s “one-click automatic re-investment,” but in reality, it may be authorized to a bunch of contracts to do arbitrage. If any of those vaults/routes/external protocols has a problem in the middle, all you can do is watch it “automatically” go to zero.

These past days, the funding rates for spot and derivatives have been extremely extreme. In the group, people are arguing whether to reverse or keep squeezing the bubble—yet I’m actually more concerned about this: when things are like this, will an aggregator push you into more aggressive places just to chase yield? In the end, you think you’re eating the interest, but you’re really taking the edge of volatility and liquidation risk.

I watched on-chain transactions for a while, and my eyes started to hurt and my neck got stiff… First, have a sip of tea. Give as little authorization as possible, keep your position size smaller, and sleep soundly.