FoundationsBeginner5 min

Why Can 20% APY Be Riskier Than 5%?

Core question

Is a pool with a higher APY automatically the better choice?

Yield and risk belong together. A high APY can come from token incentives rather than real demand, often combined with low TVL and more uncertainty. A low, stable APY from established lending can carry the lower-risk profile. SKN3X.COM doesn't tell you which pool to choose — only how the two figures relate.

Quick note: TVL (Total Value Locked) is the total capital currently held in the pool. More on this in the next lesson.

Two real examples side by side

USDC · Maple Finance

ETH · Justlend V1

Base APY
Reward APY

Height = reported APY, layers = base and reward share. The same markets as in the card below, source DeFiLlama.

Yield and risk in balance

Move the slider between two real example pools and watch the scale tip.

YieldFlags

Position between the examples

USDC · Maple Finance (no flag triggered)ETH · Justlend V1 (more than 2 flag points)

Example APY at this position

2.56%

Flag points at this position

2 points

An interpolation between two real example pools for illustration — not a forecast for any other pool.

Quick check

Nothing — a high APY is always good.Where the yield comes from and how high TVL and flag points are.Only the protocol's name.The font color in the report.

Compare risk & TVL in the report