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Lending and yields in the DeFi Wallet

From the DeFi Wallet you can access decentralised lending protocols and deposit your stablecoins to earn a return. This guide explains how opening a position works, how to interpret the return percentage shown in the app, and which aspects to evaluate before starting.

What is on-chain lending

A lending protocol is a set of smart contracts, meaning programs that run on the blockchain, where anyone who deposits crypto (you) makes it available to anyone who borrows it (other users) by leaving collateral. Anyone who borrows pays a cost; anyone who deposits receives a part of that cost as a return. Everything happens on the blockchain according to rules written in the protocol code, without any kind of intermediary in the middle.

In the DeFi Wallet, available protocols are indicated in the Lending section of the wallet page, along with the accepted crypto and average return (average APY). You can deposit USDC, USDT and EURC on integrated protocols.

When you open a position, your crypto moves from the available wallet balance to the smart contract of the protocol: they remain under the control of your keys, in the sense that only you can request their withdrawal, but as long as they are in the position you cannot send, trade or move them.

Young Platform is not a counterparty, lender, borrower, liquidity provider, custodian, intermediary or adviser in these operations: it provides the technological infrastructure and the access interface to the protocols.

The return you see in the app

Next to each protocol the app shows a percentage indicated as average APY. APY stands for Annual Percentage Yield, the annual return that would be obtained if the rate remained constant over time. The value shown is the average of the rate measured over the period you select (one week, one month, six months or one year) and changes when you change the period.

Keep in mind that:

  • The percentage describes the past, not the future.
  • It changes continuously based on what is deposited and borrowed on the protocol, and can drop, even down to zero.
  • It is not set by Young Platform and is not guaranteed by anyone: neither by Young Platform, nor by the protocol, nor by those who govern it.
  • It is not the return of a deposit account: the sums are not protected by any deposit guarantee or investor compensation system.

How it accrues and when you receive it

The return accrues continuously as long as the crypto is in the position and adds to the balance of the position itself: you see it grow in the detail screen of the protocol. There are no duration constraints: you can request withdrawal, total or partial, at any time. The withdrawal follows the rules and liquidity of the protocol and is not immediate; starting from the request, the outgoing crypto stops accruing returns, even before becoming available again in the balance. If the protocol does not have sufficient liquidity at that moment, the withdrawal may take longer.

What you pay

Opening and closing a position are transactions on the blockchain, therefore they involve network fees, payable with USDC, EURC, ETH or YNG according to what you have set in Manage fees. To these, Young Platform service fees may be added: upon withdrawal, a fee calculated on the accrued return. The exact amounts are shown in preview before each confirmation and are reported on the DeFi Wallet Fees page.

If the wallet is locked

The DeFi Wallet lock, for example after a device change or a new login to the app, only affects operations from the app. Lending positions are not affected: they remain open and continue to accrue returns until you unlock the wallet and decide what to do with them.

The risks to know

On-chain lending exposes capital to risks that do not exist in a deposit account and that no one covers for you. The main ones:

  • an error or a vulnerability in the code of the protocol can cause the loss, even total, of the deposited crypto
  • a lack of liquidity of the protocol can delay withdrawal
  • the decisions of those who govern the protocol can change its rules or rates
  • the value of USDC, USDT and EURC depends on the issuer and, for USDC and USDT, on the exchange rate between dollar and euro
  • regulatory and tax risks: the rules can change and the declaration of returns for tax purposes is your responsibility.

Before opening a position, read the Risk Disclosure and the Risks of the DeFi Wallet guide, which explains them one by one. Deposit only what you can afford to leave your capital committed and, if necessary, to lose it.

The DeFi Wallet is a non-custodial service and does not fall within the perimeter of regulated services under the MiCA Regulation for which Young Platform is authorised. Young Platform's CASP authorisation does not cover or guarantee in any way the DeFi Wallet and third-party protocols accessed through this feature: the user independently manages their private keys and is solely responsible for related operations and associated risks. Consult the DeFi Wallet Terms and Conditions for more information.