Overview
A yield aggregator is a protocol that automatically moves funds between yield opportunities to maximize returns. It reduces the effort of manually chasing the best rates. Yearn Finance is the best-known example.
How It Works
Depositors put funds into a vault, and the protocol's strategies allocate them to the highest-yielding opportunities. Strategies rotate as rates change, with deposits and withdrawals flowing automatically. Users receive yield-bearing tokens representing their position.
Why It Matters
Aggregators democratize access to optimal yield, saving users gas and time. They also concentrate risk, since a strategy failure can affect all depositors. They are a key layer of the DeFi yield stack.
Related Concepts
Yield Aggregators build on Lending and Liquidity Mining, and connect to APY and Auto-Compounding. They relate to the broader Yield Farming ecosystem.