A newly launched liquidity programme often advertises a striking annual return that falls steadily from the day it opens. The decline is built into how the reward is funded.
The yield is usually issuance, not revenue
Headline rates on new protocols are paid in the protocol's own token, minted according to a fixed emission schedule rather than earned from users.
Fees paid by borrowers or traders are the revenue side, and on a young protocol they are typically a small fraction of the advertised figure.
The quoted rate therefore describes a distribution of new supply rather than a return generated by activity.
Emissions are divided, not multiplied
A fixed number of tokens is released each block and split across everyone in the pool in proportion to their deposit.
When total deposits double, each depositor's share halves. The programme is paying the same amount to twice as many claimants.
Early participants see high rates precisely because few others have arrived, and that advantage disappears as capital follows the advertised number.
The token price feeds back into the rate
The quoted yield converts emitted tokens into a currency value, so it depends on the token's market price at that moment.
Recipients who farm for income sell into the market, which adds continuous supply. If demand does not grow to match, the price falls and the same emissions convert to a smaller yield.
The two effects compound. A falling token price lowers the quoted rate, which prompts more depositors to exit and sell, which adds further supply to the same market.
Capital that arrived for emissions leaves with them
Deposits chasing a temporary rate carry no attachment to the protocol, and they rotate to the next programme when emissions taper or a better rate appears elsewhere.
Liquidity that departs at once widens spreads and can leave a protocol thinner than before the programme started, which is the outcome the incentives were meant to prevent.
Designs that lock rewards over time, or pay more to depositors who commit for longer, are attempts to buy stickier capital rather than renting it by the day.
What a durable yield looks like
Sustainable returns come from someone paying for a service: traders paying swap fees, borrowers paying interest, or validators being paid to secure a network.
Those sources are usually modest and move with real demand rather than with a schedule. A rate that is many times what comparable activity generates is almost always issuance with a countdown attached.
The useful question about any advertised yield is who is paying it and out of what. Where the answer is a token being printed for the purpose, the rate describes a marketing budget rather than a business.