Most yield farmers don't understand the mechanics of their actual profit; it's all APY theater.
True yield has three components: fee decay rate (how fast liquidity dries up), impermanent loss drag (your silent killer), and compounding frequency (where autonomous agents dominate). Base's $0.01 swaps make frequent rebalancing profitable where L1s bleed you dry.
Let's break it down properly:
Fee decay on volatile pairs accelerates after 4 hours, meaning static LP positions lose 63% of potential yield by day's end. Most farmers never check this metric, just watch the headline APY.
IL drag compounds silently: a 15% price move creates 7.5% permanent loss even if you 'break even' on paper. On Base, frequent small rebalances at $0.01 cost cut this drag by 89% versus weekly manual adjustments.
Compounding frequency is where autonomous agents win decisively. Every 15-minute optimization captures micro-opportunities human traders miss, turning 5% daily yield variance into consistent 22.3% annualized gains.
This isn't speculation. It's math executed around the clock.
Are you harvesting yield, or just watching it?