Imagine if your funds could move into the best investment opportunities on their own. No more tracking multiple DeFi platforms, making manual transfers, calculating returns. Just effortless earning. That’s how yield aggregation works, which makes DeFi investing easier and more efficient. However, what does the future hold for Yield Aggregation? Let’s find out. 

How Does Yield Aggregation Work?

Yield aggregation makes the investment easy in DeFi by forwarding your funds to the most profitable opportunities. Here’s a step-by-step explanation.

Step 1: Deposit Your Funds: Users connect their crypto wallet (like MetaMask) to the yield aggregator platforms (e.g., TDX) and deposit funds such as Ethereum, Bitcoin, or Stablecoins like USDT (preferable). Then, the platform moves your funds into a liquidity pool to start generating returns.

Step 2: Pool Funding (Phase 0): After depositing the funds, the Yield Aggregators distribute funds automatically across different yield-generating strategies that will maximize your returns. These strategies include:

• Lending Protocols: The pool lends money to borrowers, just like a bank loan. In return, it earns interest on the loaned amount.
  
• Staking Pools: The funds are locked into a system to help run a blockchain network. In return it earns rewards, similar to earning interest in a savings account.
  
• Liquidity Provision: The funds are added to decentralized exchanges (DEXs) like Uniswap, Curve, SushiSwap, and Balancer, allowing smooth crypto trades. In return, liquidity providers earn a small fee from each transaction.
  
• Yield Farming: The funds are placed in DeFi protocols like Aave, Compound, Curve, and Yearn Finance, offering extra rewards in new tokens, and boosting overall earnings.

The Yield aggregator uses this diversification strategy to ensure that your funds are constantly working to generate returns as high as possible.

 

Step 3: Collateral Setup (Phase 1): The Yield Aggregator deposits your funds as collateral to borrow more crypto, which is then reinvested for higher returns. It is an optional as this depends on the user preferences or the platform’s settings.

Step 4: Strategy Execution (Phase 2): The borrowed capital is deployed into different DeFi strategies like lending, staking, or yield farming, for the best returns. The yield that is generated from these strategies is collected regularly.

Step 5: Reinvestment (Phase 3): The yield earned is reinvested automatically, which increases your profits. This compounding effect maximizes your investment without needing manual effort.

The entire process is optimized as well as automated with yield aggregation, which further makes it easy to get the best possible return on your investment with minimal manual efforts.

Yield Aggregator Mechanism

Why Is Yield Aggregation Important?

Yield aggregation is essential as it automates investing, enabling users to get the best returns with less effort. It increases profits and saves time. Let’s see how it makes investing easier and more rewarding.

I. Greater Yields (APY) 

Yield aggregators in DeFi offer significantly greater yields by identifying the best opportunities across different protocols, while traditional banks offer very low APY. An example has been illustrated in the table below.

II. Lower Cost

Whenever you deposit, withdraw, or move funds in DeFi platforms, you have to pay a gas fee for the transaction. If you do this frequently, then the cost can add up quickly. To solve this, the yield aggregators combine the funds from multiple users and process the transaction together, this fee is shared among all users, so each user has to pay a lower fee compared to their own transaction fee. This makes investing more affordable, except in such cases as high network congestion or sudden gas fee spikes, which may still impact costs.

III. Automated Transfers 

Cross-protocol transactions occur through smart contracts, automatically moving funds between DeFi platforms. This eliminates the requirement for manual transfers, saving time and reducing errors while ensuring investments go to the best opportunities. [Simon Cousaert, 2022]

IV: Reduce Risk

Yield aggregators spread your investment across multiple platforms instead of relying on just one. This way, if one platform has issues such as hacks and sudden drops in returns, your funds channeled into other platforms keep earning. This helps reduce risk and keeps your returns more stable.

Current Landscape of Yield Aggregation

With the Total Value Locked (TVL) in DeFi across all the chains reaching $105.801 billion in early 2025, this rapid growth reflects confidence in DeFi, driven by its ability to deliver competitive & consistent returns on investments (ROIs). 

The pie chart below represents the current landscape of Yield Aggregation, showcasing the share of different blockchain networks in the sector. Ethereum (53.3%) currently dominates the space, followed by Solana (8.3%), Bitcoin (5.47%), Binance Smart Chain (5.22%), and Tron (4.56%).

Other Networks like Berachain, Base, Arbitrum, Sui, and Avalanche hold smaller portions, with the remaining 12.27% distributed among various blockchains. This data highlights Ethereum’s strong presence in Yield Aggregation while showcasing the growing participation of other blockchains.

Source: DeFillama

Shifting Blockchain Trends

In February 2020, Ethereum controlled 95.27% of the DeFi market, but its dominance has steadily declined. As new blockchains like Solana, Binance Smart Chain, and Avalanche offered lower fees and faster transactions, more users started exploring alternatives.

By 2025, Ethereum’s share has dropped to around 50-55%, showing a clear shift towards a multi-chain DeFi ecosystem. While Ethereum is still a major player, its once-total control is now shared with other growing networks.

Source: DeFillama

The decline of Ethereum’s share can be contributed to the following three critical reasons:

• High Gas Fees: Sending transactions on Ethereum can be costly, which makes users look for cheaper options on other blockchains.
  
• Scalability Issues: Ethereum can get crowded due to network congestion, even with improvements. This may slow down transactions and increase the fees.
  
• Rise of Multi-Chain DeFi: Users are shifting their investments across multiple blockchains for better efficiency and lower costs.

Why Are Other Blockchains Growing?

The heat map above shows that Solana has grown from 2-3% in 2021 to around 8-10% in 2025 because it offers faster & cheaper transactions. Binance Smart Chain also increased from 4-5% to 6-7% due to its strong connection with Binance & low fees.

By making Ethereum transactions cheaper & faster, layer 2 solutions like Optimism and Arbitrum grew from almost nothing to 10-12%

Avalanche increased from less than 1% to around 3-4% due to its quick transaction speeds & growing network.

This shows that DeFi and yield aggregation is no longer just about Ethereum. People are choosing other blockchain networks for lower costs, faster transactions, and better scalability.

The Future of Yield Aggregation

Yield Aggregation is transforming how DeFi works by making investing easier & efficient. With Artificial Intelligence, cross-chain compatibility, and automation, users can earn higher returns without putting in any manual effort. As Decentralized Finance grows, yield aggregators will keep on optimizing earnings and reducing risks.

I. Artificial Intelligence (AI) 

AI is transforming Yield Aggregation by making it more efficient and smarter at the same time. It analyzes data from Decentralized Finance protocols, adjusts strategies in real-time, finds the best yield opportunities, and manages risks to protect your funds. Artificial Intelligence also predicts future trends and tailors strategies to your preferences, such as low-risk or high-reward options. By automating tasks such as optimizing gas fees and reinvesting earnings, AI saves your time while maximizing returns at the same time.

II. Cross-Chain Compatibility

The majority of yield aggregators work on a single blockchain, like Harvest Finance, limiting users to opportunities within their specific network. However, the future of yield aggregation lies in cross-chain compatibility. Eventually, it allows platforms to operate across multiple blockchains like Ethereum, Binance Smart Chain, Polygon, and Solana. This means users will be able to access the best yield opportunities on several chains at the same time.

III. Better User Experience for Everyone

Decentralized Finance platforms often ask for KYC verification, constant tracking, and manual swaps. It makes investing time-consuming and complex, especially for beginners. This is where the role of Yield aggregators comes in. They changed this scenario by simplifying the process as well as making DeFi accessible to everyone. Platforms like TDX further improve this condition with single-click investments, and removing extra KYC steps and token swaps. This eventually makes DeFi more accessible and efficient.

The Future Is Here – TDX

AI automation, cross-chain compatibility, and a seamless user experience are shaping the future of yield aggregation. Platforms like TDX make this a reality by simplifying DeFi investing and optimizing returns.

TDX removes the need for constant monitoring, manual research, as well as frequent transactions. Instead of switching between platforms, TDX automates the process of selecting the best yield options and reallocating funds efficiently.

For beginners, TDX offers a one-click investing experience with no extra KYC or complex token swaps. AI-powered strategies (coming soon) will further improve returns by analyzing market trends and adjusting funds in real time.