Definition
In DeFi, a strategy is a conceptual framework that specifies how crypto assets are deployed, rebalanced, and managed to achieve a targeted financial outcome. It encodes assumptions about risk, expected returns, and market conditions into a repeatable set of allocation and management rules. Strategies can be implemented manually or embedded in smart contracts, where they operate according to predefined logic without ongoing discretionary decisions.
A strategy often determines how funds move between different protocols, how rewards are handled, and how exposure to various assets is maintained or adjusted. It may prioritize stability, aggressive growth, or income generation, depending on its design. The concept is independent of any single platform, but in practice is frequently packaged within products such as a Vault that executes the underlying rules on-chain.
Context and Usage
Within DeFi, strategies commonly govern how capital is allocated to activities such as Yield Farming, where tokens are supplied or staked to earn additional rewards. Some strategies are designed to focus on Real Yield, emphasizing revenue that originates from actual Protocol Revenue or on-chain economic activity rather than purely inflationary token emissions. Others may blend multiple sources of return based on their defined objectives.
The term strategy is used both at a high level, to describe the overall approach a protocol or product takes to generating returns, and at a granular level, to refer to specific configurations or modules within a broader system. In all cases, it refers to the abstract logic that dictates how assets should be positioned and managed over time, rather than to the technical implementation details of the smart contracts that execute it.