Yield wrapping is a strategy used in decentralized finance (DeFi) that allows users to maximize returns on their crypto assets. It involves taking tokens that may earn yield through lending, liquidity pools, or staking and wrapping them into a new token that can also generate returns. The process typically includes using these original tokens as collateral to mint a wrapped version, which can be further utilized in different DeFi protocols. This wrapping enables users to earn compound interest or take advantage of multiple yield-generating opportunities simultaneously.For example, if a user has assets in a liquidity pool earning trading fees, they can wrap those assets and then use the wrapped token in another protocol to earn additional yields. This multi-layered approach can significantly increase profitability, though it also comes with risks like impermanent loss and smart contract vulnerabilities.