A yield token represents an asset that provides holders with returns through various mechanisms, typically in the form of interest or rewards. These tokens are often generated through lending platforms, liquidity pools, or yield farming activities.When users deposit cryptocurrencies into a lending or liquidity platform, they can receive yield tokens in return. These tokens signify the amount of capital they have contributed and often accrue rewards based on the total assets in the pool.Yield tokens can be traded or used within other decentralized finance applications. They allow users to earn passive income while maintaining the ability to withdraw their original investments. Additionally, yield tokens may have features that enable governance voting or staking, further increasing their utility.Risk is involved, as the returns are not guaranteed and can be affected by market fluctuations or platform vulnerabilities. Understanding the mechanics and risks associated with yield tokens is crucial for anyone looking to invest in or utilize them.