DeFi protocols let users lend stablecoins for yield, borrow against crypto collateral, trade on a dex, or stake tokens. Yields come from real borrowing demand, from token emissions, or from risk that is not obvious.
Risks include smart-contract exploits, oracle failures, and cascading liquidations when collateral values fall.
Example: depositing $10,000 of USDC into a lending protocol at 6% earns about $600 a year, if the protocol is not hacked and the stablecoin holds its peg.
Related: dex, staking, stablecoin, gas-fee