Crypto yield from tokenized strategies: BTCaf, USDaf, ETHaf and SOLaf

Crypto yield is a return earned on an asset you keep, paid from an activity someone is willing to pay for. Proof-of-stake networks such as Ethereum and Solana pay participants for helping secure the chain. Borrowers pay to borrow stablecoins, usually to fund trading or to post as collateral. Traders who want leverage pay funding to those on the other side of a hedged position. Each of these is a real source, and each has its own way to fail.

Earning interest on crypto usually means something narrower: lending your coins to a platform that lends them onward and pays you part of the interest. Under many of those terms the coins become the platform's property, and you hold a claim on the company, not on the coins. That model failed customers of Celsius and BlockFi in 2022. It also differs from a bank savings account, which the FDIC insures up to the statutory limit. Crypto yield is not insured, which is part of why it can pay more than an insured account.

Each tokenized strategy draws on a different source, so each carries a different risk. BTCaf borrows stablecoins against Bitcoin and deploys them into delta-neutral positions such as basis trades, where the return comes from a price spread rather than from the direction of Bitcoin. USDaf lends dollar stablecoins and provides liquidity through counterparties and protocols that pass Abra's screening. ETHaf and SOLaf stake with validators operated by Kiln and add DeFi strategies on their networks, including liquid staking tokens, lending and liquidity provision.

The table sets the four side by side by mechanism, not by rate. Rates change with market conditions, differ once fees are applied, and tell you little about where the risk sits.

A yield account is a balance on a provider's books. A tokenized strategy is a token, issued on a blockchain by AbraFi, that represents a position in a strategy. The token can be held in a wallet you control, recorded in an advised account or used by other applications, which is what people mean when they call such assets composable.

Not every Abra strategy is tokenized. The Abra Digital Income Strategy is a managed strategy offered only through Abra Capital Management, and the staking-only strategies for ETH and SOL are also managed products for Abra Capital Management clients. Those are described on the Abra Capital Management pages. The four tokenized strategies are described here because the explanation applies however you choose to hold them.

Through Abra Capital Management, LP, an SEC-registered investment adviser, US clients hold the strategies inside an advised account. Abra instructs the strategy under an advisory agreement, the account is reported on, and the terms and fees are set out on the Abra Capital Management strategy pages. Registration does not imply a certain level of skill or training.

You connect a wallet you control, sign each transaction and interact with the protocol directly. There is no adviser, no statement and no fiduciary duty, and the operational and key-management risk sits with you.

The managed path may be relevant if you want regulatory structure, reporting and someone accountable for the mandate. AbraFi may be relevant if you already run your own keys and want direct protocol access. The two are separate decisions, with separate terms.

Yield strategies can lose value. Returns are variable, not guaranteed, and may be negative in a given period. Each strategy carries market risk on the underlying asset, counterparty risk where it relies on venues or service providers, and protocol risk where it uses on-chain infrastructure. Staking strategies add validator and unbonding risk. Stablecoin strategies add the risk that a stablecoin trades below one dollar.

There are structural trade-offs too. Assets in a strategy are subject to its redemption terms, so they are less immediately available than assets held without one. Yield received in crypto may create taxable income when you gain control of it, even though you have not sold anything. Digital assets are not bank deposits and are not FDIC or SIPC insured.