Before you invest

How DeFi actually works. In plain language.

DeFi has four main ways to put your crypto to work — yield, liquidity pools, lending and staking. They look similar (“earn %”) but behave very differently: how fast you can get your money out, whether you can lose value to price moves, and what can go wrong. Here's the honest version — so you choose with your eyes open. This is education, not financial advice. Always do your own research.

The four building blocks, side by side

Block	What you deposit	How it earns	Getting your money out	Impermanent loss?	Main risk	Best for
Yield (single-asset)	One token (e.g. a stablecoin)	Savings rate, T-bills, delta-neutral or fixed yield — paid in the same token	Varies by protocol: instant to a cooldown (e.g. ~7 days) or locked to a maturity date	No	Protocol / issuer risk (smart contract, de-peg, counterparty)	Beginners, stablecoin holders
Liquidity pools (LP)	Two tokens into a pool (e.g. ETH + USDC)	A share of the swap fees traders pay	Usually anytime, subject to pool liquidity	Yes	Impermanent loss if the two prices drift apart	More advanced users
Lending	One token as a deposit (and optional collateral to borrow)	Interest paid by borrowers (variable rate)	Anytime, subject to available liquidity in the market	No	Liquidation if you borrow and your health factor drops	Earning on idle assets; borrowing without selling
Staking	ETH (or a staked token to restake)	Network rewards for securing the chain	Staked token is tradable anytime; native exit is a queue (days)	No	Slashing, validator and liquidity concentration risk	Long-term ETH holders

Rule of thumb: single-asset yield, lending and staking don't have impermanent loss — your token count doesn't shrink because of a price move. LP does, in exchange for fee income. The biggest practical difference between the rest is how quickly you can exit.

Yield — single-asset, no impermanent loss

You deposit one token and get the same token back, plus interest. The yield comes from a savings rate, tokenized treasuries, a delta-neutral strategy or a fixed-rate position — never from mixing two assets, so there's no impermanent loss. The catch is exit speed: it depends entirely on the protocol.

Sky sUSDS — savings rate on USDS; withdraw roughly anytime.
Ethena sUSDe — delta-neutral yield; unstaking has a ~7-day cooldown.
Ondo USDY — tokenized US T-bills (RWA); redemption follows the issuer's terms.
Pendle PT — fixed yield, but your capital is locked to the maturity date (you can sell early on the market at a variable price).
Maple syrupUSDC — institutional lending; higher yield, but counterparty/credit risk and withdrawals on a cycle.

What it implies: no price-divergence loss, but read the exit terms first — some positions are instant, others have a cooldown or a lock-up. Yield is the most beginner-friendly block.

Not ideal if you need your funds back on zero notice and picked a locked or cooldown strategy.

Liquidity pools (LP) — two assets, fee income

You provide two tokens to a pool on a decentralized exchange and earn a share of the fees traders pay to swap through it. More potential yield — but if the two prices drift apart, you can end up with less value than if you'd simply held the tokens. That gap is impermanent loss, and it's the defining risk of LP.

Earns from — swap fees (and sometimes extra incentives).
Exit — usually anytime, subject to the pool's liquidity at that moment.
Impermanent loss — the more volatile the pair, the larger the potential drift; stablecoin pairs drift least.

What it implies: the headline APR can be eaten by impermanent loss if prices move. LP suits users who understand the trade-off — Mo'Stash spells out the risk in plain language before you commit.

Not ideal for beginners, or for a pair of assets you expect to diverge in price.

Lending — earn interest, or borrow without selling

You supply a token to a lending market (Aave v3, Compound v3) and earn interest paid by borrowers. You can also post collateral and borrow against it without selling — useful for liquidity without a taxable sale. There's no impermanent loss, but borrowing introduces liquidation risk.

Supply APY — variable, driven by how much of the pool is borrowed (utilization).
Exit — withdraw anytime, as long as there's free liquidity in the market.
Health factor — if you borrow, this number tracks how safe you are; if it falls too low, part of your collateral is liquidated.

What it implies: depositing alone is low-friction. The moment you borrow, you must watch your health factor — Mo'Stash sends progressive alerts before you reach the danger zone.

Not ideal if you borrow heavily and can't react to a price drop — that's how liquidations happen.

Staking — rewards for securing the network

You stake ETH to help secure the network and earn rewards. With liquid staking (Lido, Rocket Pool) you receive a token (stETH, rETH) that keeps earning and can be used elsewhere, so you're not fully locked. Restaking (EigenLayer) stacks extra yield on top — with extra risk.

Lido (stETH) — liquid: sell/use anytime, or exit via the unstaking queue (days).
Rocket Pool (rETH) — liquid token; direct burn-to-ETH depends on pool liquidity.
EigenLayer — restaking adds rewards but also extra slashing risk and an unstaking escrow.

What it implies: you're rarely fully locked (the liquid token is tradable), but a full native exit takes days. Rewards are paid in ETH terms.

Not ideal if you want a large guaranteed exit on the same day, or can't accept slashing/concentration risk.

Practise first — with zero risk

Still unsure which block fits you? Mo'Stash's free simulation mode lets you try all four with fake money, see the real mechanics (cooldowns, health factor, impermanent loss) and watch a simulated P&L — before a single real dollar is involved. Your keys and funds stay yours at every step.