Just dug into the numbers on DeFi yield generation last year and honestly, the picture is pretty sobering. Researchers broke down where the $8 billion in onchain yield actually came from in 2025, and it's way more fragmented than most people realize.

Here's what stood out: AMM trading fees were the biggest piece at around $4.2 billion, with Uniswap, Meteora, and Raydium making up most of that. But here's the catch - those fees are ridiculously hard to actually package into products that work. LPs are constantly getting rekt by toxic order flow, and all these LP-manager vaults have basically flopped.

Borrow interest generated about $1.76 billion across Aave, Morpho, Spark, Maple and Fluid. Money markets are basically the backbone of DeFi at this point, but the wild part is that roughly half of all borrowing is recursive - people just looping capital into other yield sources. On Aave's Ethereum side, 39% of borrows are literally just leveraging ETH staking rewards.

Perps funding fees contributed around $300 million, mostly through Ethena's model. RWAs brought in somewhere between $600-900 million, with U.S. Treasuries taking the biggest chunk. Then you've got staking rewards and MEV making up the rest - though MEV yield has been trending down as private order flow routing kills frontrunning.

But here's the real issue: stablecoin yields have completely compressed. On Aave, USDC and USDT are sitting around 2% on the 30-day average. Out of $20 billion in stablecoin vaults across Ethereum and its L2s, 58% is earning under 3% APY. That's below what you get from U.S. Treasuries now.

The interesting case study is Sky - formerly MakerDAO - which has managed to attract serious capital with its 3.75% USDS savings rate. Their TVL jumped 38% in March, making them the fourth-largest protocol. But get this: about 70% of their income is actually coming from offchain sources. They're earning Coinbase rewards through their peg stability module, plus exposure to RWAs like BlackRock's BUIDL. The remaining 30% flows from onchain allocations through Spark and other opportunities.

The takeaway from all this DeFi news is pretty clear - yield is there in aggregate, but it's unevenly distributed, often circular, and getting harder to actually capture. Even as traditional finance yields flow through onchain channels, it's creating a floor for DeFi rates. Might be setting up for the next wave of yield derivatives - fixed-rate products, interest-rate swaps, structured tranches. Worth watching how this develops.