DeFi Yield Aggregators: Analysing Investment Strategies and Structural Dependencies

2026-05-22

AI Summary

This study investigates the efficacy of investment strategies employed by DeFi yield aggregators and their inherent dependence on structural risks. By developing a dual-cycle analytical framework that integrates user investment behavior and strategy management, the authors combine transaction network modeling, capital flow tracing, and protocol interaction analysis. They extend the DeFi Stack Reference Model with novel financial primitives to formally capture structural risk. Applying this approach to Yearn Finance and Cian between May 2024 and May 2025, empirical results reveal that Yearn’s USDC vault achieved an annualized return of 5.41%, while Cian’s stETH vault yielded 4.22% but exhibited substantially higher risk. The findings indicate that increased strategy complexity does not significantly enhance returns; instead, it amplifies risk exposure, underscoring an asymmetric relationship between risk and reward in yield aggregator design.

Abstract

Yield aggregators are financial services in Decentralised Finance (DeFi) providing automated investment management and return optimisation for users. In this study, we investigate the operational mechanisms and monetary flows of two major yield aggregators, Yearn Finance and Cian, over the period from May 4, 2024 to May 3, 2025. Our supporting conceptual framework decomposes yield aggregator operations into user investment and strategy management cycles. Using a network approach for 2,459 Yearn and 921 Cian transactions, we trace protocol interactions and capital flows across the ecosystem. Users invested 15.7M USD into Yearn's USDC vault, which generated yield through liquidity provision and dynamic allocation across DeFi protocols. Cian, deployed later, attracted 54.0M USD into its staked-ETH (stETH) vault and implemented sophisticated leverage through flashloan-enabled recursive staking. Yearn's USDC vault achieves an annual yield of 5.41%, while Cian's stETH vault produces 4.22% with higher risk exposure. We use the operational insights from our analysis to extend the existing DeFi Stack Reference Model (DSR) with new financial primitives to highlight structural risk dependencies. Overall, our findings show that strategic complexity in yield aggregation does not necessarily translate into higher returns but materially expands risk exposure.

Problem

• DeFi
• Yield Aggregators
• Investment Strategies
• Structural Dependencies
• Risk Exposure

Innovation

• yield aggregators
• network analysis
• DeFi Stack Reference Model
• flashloan-enabled recursive staking
• structural risk dependencies