Yield inflation refers to the increase in the yield offered on a specific cryptocurrency or decentralized finance (DeFi) asset as more investors participate in it. This can occur when the supply of tokens being staked or lent increases, leading to higher rewards for participants.As more people enter a project and lock up their assets, the total amount of tokens generating yield rises. Consequently, the initial yield can become diluted, causing returns to decrease over time. Yield inflation can also impact the overall attractiveness of an investment, as new participants might see diminishing returns compared to early adopters.It’s essential for investors to consider yield inflation when evaluating potential returns. High yields can be enticing, but if they are unsustainable, they may not maintain their value in the long run. Understanding how yield inflation works helps investors make informed decisions and manage their risks effectively.