Retail investors in decentralized finance (DeFi) frequently face losses despite high advertised annual percentage yields (APYs), as hidden costs such as impermanent loss, gas fees, and low liquidity diminish returns. While institutions leverage advanced risk models for sustainable profits, retail investors often pursue the highest APYs without fully understanding the associated risks. Marketing strategies exploiting psychological biases like anchoring and FOMO further entice retail users. Experts advise investors to scrutinize yield sources, account for hidden costs, and diversify strategies to mitigate unsustainable returns.
High DeFi APYs Often Mislead Retail Investors, Eroding Profits
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