Short answer: DeFi carries risk—but those risks are transparent, measurable, and often more predictable than in traditional finance.

When you lend in DeFi, you always take on counterparty risk, but unlike traditional banking, you can see exactly where that risk sits. Every loan, collateral ratio, liquidation rule, and repayment flow is defined in immutable smart contracts that anyone can audit.

By contrast, 2008 and recent bank failures showed how much risk is hidden inside the traditional financial system—rehypothecation of deposits, leveraged loan books, balance-sheet opacity, and human discretion behind closed doors.

DeFi flips this:

• Transparent collateral: Borrowers post 150–200%+ collateral.
• Automatic liquidations: Positions are liquidated instantly when thresholds are breached—not months of legal process.
• Battle-tested protocols: We focus exclusively on protocols with long track records and billions of processed liquidations.

In 2022 alone, over $1B of borrower collateral was liquidated safely and automatically, with lenders made whole—no bailouts, no systemic failures.

Bottom line: DeFi isn't risk-free, but the risks are visible, rules-based, and enforced by code rather than human discretion.

DeFi yields are not high because of "magic" or leverage—they're high because the market is:

1. Extremely fragmented

Thousands of protocols compete for lender funding, creating structural inefficiencies that early adopters can capture.

2. Transparent and incentive-driven

Protocols must offer compelling rates to attract liquidity. There is no centralized entity setting savings rates—markets set them dynamically.

3. Built on over-collateralized borrowing

Borrowers often accept higher borrowing costs because DeFi offers:

• Instant liquidity
• No credit checks
• No paperwork
• Global, permissionless access

The combination creates real, market-driven yields for lenders—not subsidized yields, not opaque spreads.

No. Zero.

IDX YieldStack is a self-custodial interface. We never take custody of your assets.

• Funds remain in your wallet until you sign a transaction.
• Deposits go directly from your wallet to the audited smart contract of the underlying protocol.
• IDX cannot move, freeze, rehypothecate, or access your assets in any way.

We are a gateway and analytics layer, not a custodian.

Your only counterparty exposure is to the protocol you choose—and our role is to help you evaluate those risks intelligently.

Yields in DeFi are variable, not fixed. They adjust dynamically based on supply and demand for capital within each protocol.

Why they move:

• High borrower demand → yields rise
• Low borrower demand or "risk-off" markets → yields decline

This is the trade-off of decentralized markets: You gain maximum control, transparency, and instant liquidity, but you do not lock in a fixed rate like a traditional CD or bond.

Can you lock in rates?

Not in most lending protocols. Stable yields exist only in select structured products, but they typically involve additional layers of risk or longer lockups.

YieldStack focuses on liquid, transparent, over-collateralized lending markets where you can deposit or withdraw at any time.