A yield aggregator is a DeFi application that organizes one or more earning strategies behind a common deposit and management process. It may allocate assets among lending markets, liquidity pools, or other vaults. The aim is to manage opportunities and repeated operations, rather than create a new source of income simply by combining protocols.
What the automation does
An aggregator can collect reward tokens, exchange them, reinvest proceeds, and rebalance allocations according to its strategy. Depositors commonly receive vault shares that track their claim on managed assets. Some products use a single strategy; others distribute funds across several strategies selected by managers, governance, or programmed rules.
Automation can reduce the need for individual transactions, but its economic benefit depends on position size, trading costs, and the actual strategy. It does not necessarily switch continuously to the highest advertised rate.
Evaluating the combined exposure
A quoted APY may reflect past performance and assumptions about reinvestment. Management or performance fees, slippage, and withdrawal costs affect the result.
The aggregator adds dependencies on its contracts and allocation decisions while retaining the risks of underlying protocols. Several strategies may share the same collateral, oracle, or liquidity source, so a longer strategy list does not automatically provide meaningful diversification.