Calculate real earnings by correcting nominal APY for token supply inflation.
Annual supply growth rate (emissions).
Your share of the total market cap is strictly increasing over time.
High APY (100%+) is a trap if supply doubles too. If you don't stake, you are subsidizing stakers via dilution.
Real = ((1 + Nominal) / (1 + Inflation)) - 1Best yields are paid in external assets (USDC/ETH), as they don't require native token printing.
High rewards create constant sell pressure as stakers dump tokens to realize gains, crushing price.
We use the Fisher-derived calculation: Real Yield = ((1 + Nominal APY) / (1 + Supply Inflation)) - 1. This correctly accounts for the diminishing value of the currency unit.
High yield is a liability if the token supply grows faster. If a protocol pays 100% APY but inflates supply by 200%, the 'Real Yield' is actually negative.
Protocol inflation is effectively a secondary tax on holders. If you aren't staking, you are subsidizing stakers by losing your percentage share of the market cap.
Sustainability is found in protocols that pay rewards in external assets (like USDC/ETH) or have 'Burn' mechanisms that offset emission-based inflation.
True value accrual happens when protocol revenue is used to reward holders without printing new tokens, or when demand outpaces the emission schedule.