Staking, DeFi and crypto yield: where does the return come from?

G30 · Local educational explanation • checked 6 October 2026

Educational explanation, checked 6 October 2026. No deposit, wallet-connection or trading instructions. The examples use fictional values; they do not determine suitability, eligibility or a universal halal/haram ruling.

Four sources that should stay separate

“Earn” is a marketing label, and DeFi means decentralised finance, usually financial functions carried out through smart contracts. Neither label tells you the contract. A Malaysian reader seeing a percentage needs the payer, reward asset, fee basis and exit conditions before that number is useful.

Validation rewards compensate participation in a proof-of-stake network’s operation. Ethereum’s documentation describes block proposal, checking and attestation, with penalties for downtime and slashing (a penalty that destroys part of the stake) for provable misconduct. Direct validation, delegated operation, a pool and custodial staking introduce different operators and custody risks; these Ethereum details do not apply identically to every blockchain.

Lending is different. Aave describes supplying tokens to a lending pool that supports collateralised borrowing; supply interest and borrower obligations follow protocol parameters. Liquidity provision instead makes assets available for exchanges: Uniswap documentation describes trading fees for active liquidity, with separate protocol fees and version-dependent rules. Incentive emissions distribute reward tokens under a configured programme; Aave V3 documents a reward rate and distribution end. That distribution is not itself proof of borrower interest, trading revenue or newly minted tokens.

Sources: Ethereum staking documentation · Aave supply documentation · Uniswap fee mechanics · Aave V3 incentive mechanics

Figure 1. Where does the advertised return come from?

Four distinct reward routes • comparison, not an instruction or a single product

ValidationNetwork rewards / relevant transaction fees → validator or staking operator → participant under the arrangement. Exposure: performance penalties and operator/custody risk.
LendingBorrower pays interest → pool under its rate rules → supplier. Borrower owes debt; supplier has pool/contract and withdrawal exposure.
Liquidity provisionTrader pays swap fee → applicable split → active liquidity provider. Asset mix and relative-to-holding value can change.
Incentive emissionsConfigured reward-token programme → eligible participants. Separate from interest or trading fees; inspect funding, token value and end date.

Mechanism comparison using Ethereum staking, Aave supply and V3 incentive documentation, and Uniswap fees; all accessed 6 October 2026. No live rate, active campaign, common contract or Malaysian approval is inferred. Newly authored explanation.

Sources: Ethereum staking documentation · Aave supply documentation · Aave V3 incentive mechanics · Uniswap fee mechanics · Uniswap v2 return-risk explanation

Full text alternative: Validation rewards arise from network work. Lending returns involve borrower interest and a repayment obligation. Liquidity fees arise from traders and depend on applicable fee splits and active liquidity. Incentive tokens arise from a configured distribution programme. A product may combine routes, but each needs separate verification.

What leaves your control, and what comes back?

Trace both the asset and the obligation. In custodial staking, a provider can hold your assets while arranging validation with another operator. Under Luno’s Malaysia staking terms, the user remains beneficial owner and Luno continues holding the assets; the main terms also allow shared blockchain addresses with separate account records. This is attributed custody wording, not a guaranteed insolvency recovery outcome.

A lending-pool supplier is exposed to the pool’s contracts, available liquidity and underlying borrowing activity. Aave’s withdrawal page conditions access on unborrowed liquidity; using supplied assets as collateral adds borrow-position restrictions. The supplier and borrower are different roles. Supplying alone is not the same thing as taking a leveraged loan.

A liquidity provider’s asset mix can change as trades occur. Uniswap v2’s explanation distinguishes fee earnings from losses relative to simply holding the original tokens. The term “impermanent loss” does not mean a loss is certain to disappear or is harmless; relative underperformance can coexist with a gain in ringgit value. For concentrated liquidity, Uniswap’s fee page says out-of-range positions stop earning fees until price re-enters. Do not copy a v2 calculation into every v3/v4 position.

A liquid-staking receipt can add another claim or token-price layer; selling that receipt and withdrawing the original staked asset are different processes. Reusing it as collateral adds borrowing exposure. Read every layer’s redemption, custody and loss terms rather than assuming that the word “liquid” promises immediate redemption at full value.

Sources: Luno staking terms · Luno Malaysia account terms · Aave withdrawal conditions · Uniswap v2 return-risk explanation · Uniswap fee mechanics · Ethereum staking documentation

Borrowing adds a debt and a forced-exit risk

Leverage means using borrowed assets to enlarge an exposure. A return strategy with borrowing has a financing cost as well as a reward. Aave states that interest starts accruing on borrowing and rates can change. If collateral value falls or debt grows enough, collateral can be taken during liquidation: a liquidator repays debt and receives collateral plus a bonus under the applicable rules.

Figure 2 uses Aave’s health-factor formula only. All values are fictional ringgit-equivalent valuations: one collateral, RM6,000 fixed debt and an assumed 80% liquidation threshold. It does not imply that Aave lends ringgit or that 80% applies to a current market. The initial borrowing limit (loan-to-value) and the liquidation threshold are different parameters; the chart is not a borrowing limit.

At RM7,500 collateral, the factor is exactly 1; below that, the simplified model is eligible for liquidation. Equality is a boundary, not a safe recommendation. If debt instead rises to RM6,500, that boundary rises to RM8,125 collateral. Actual price feeds, multiple collateral/debt assets, governance changes, liquidation amounts, bonuses and transaction costs are outside this illustration.

Sources: Aave borrowing obligations · Aave health-factor and liquidation mechanics

Figure 2. Leverage and liquidation

Fictional single-collateral model • RM-equivalent values • fixed debt RM6,000 • assumed threshold 80%

Health factor (HF) = collateral value × 0.80 ÷ RM6,000 debt. Bars show collateral value, not a probability of loss.

RM10,000HF 1.333 · Above boundary; not a safety guarantee
RM8,500HF 1.133 · Above boundary; not a safety guarantee
RM7,500HF 1.000 · Exactly at boundary
RM7,000HF 0.933 · Below 1; eligible for liquidation in this model

If debt becomes RM6,500 instead, HF=1 requires collateral RM8,125 (6,500 ÷ 0.80).

Aave’s live formula, accessed 6 October 2026; all amounts and the 80% threshold are fictional. Actual protocol/market parameters and price feeds must be checked. No liquidation amount, bonus, initial borrowing limit, fees or intervention strategy is calculated.

Sources: Aave health-factor and liquidation mechanics · Aave borrowing obligations

Full text alternative: Collateral RM10,000 gives HF 1.333; RM8,500 gives 1.133; RM7,500 gives 1.000; RM7,000 gives 0.933. The model uses exact values to assess below/equal/above 1, although labels round to three decimals. Debt growth can shift the boundary even without a price fall.

More tokens can still mean less ringgit

Compare gross rewards, fees and asset value separately. Luno’s reward explanation says its Annual Rewards Percentage (ARP) is an annual estimate based on the last 30 days of staking rewards; it varies with network conditions and already reflects its service fee. That recent average is not a promise that the same rate lasts a year. For any offer, ask how its percentage is calculated, whether it assumes reinvestment, and whether payment is in the original asset or another token.

For a real fee example, Luno’s Malaysia page checked on 6 October 2026 lists ADA 20%, ETH 30% and SOL 35% as fees on blockchain rewards, not on the whole staked holding. It says the estimated Annual Rewards Percentage (ARP) already takes that fee into account and staking/unstaking has no fee. Buying, selling or sending can have separate costs. Do not deduct the same reward fee twice from a displayed net estimate.

Aina’s fictional example starts with 100 units worth RM10 each, earns 6 gross units over an assumed period, and applies a 35% reward fee. It ends with 103.9 units. At RM8 per unit, those units are worth RM831.20, versus RM1,000 initially. The reward is positive in tokens but the marked value is RM168.80 lower. The 6% and prices are invented; only the 35% fee basis mirrors the SOL row of Luno Malaysia’s undated fee page checked on 6 October 2026. This is not an actual SOL return forecast. No compounding, slashing, taxes or buying/selling/sending fees are included.

Sources: Luno Malaysia fee page · Luno reward estimate method

Figure 3. A positive token reward, a lower ringgit value

Aina’s fictional arithmetic • 100 units • 6% gross over an assumed period • 35% fee on reward • price RM10 → RM8

Starting holding100 units × RM10 = RM1,000.00.
Reward minus feeGross 6.0 units − 2.1 fee units = 3.9 net units.
End marked value103.9 units × RM8 = RM831.20. Change from start: RM-168.80.

Fictional price/reward model. The 35% reward-fee basis mirrors the SOL row of Luno Malaysia’s undated fee page checked 6 October 2026; no actual reward rate or future fee is promised. No compounding, slashing, tax or transaction fees; marked value is not cash actually received.

Sources: Luno Malaysia fee page

Full text alternative: 100 starting units earn 6 gross units. Fee is 2.1 units, net reward 3.9 units and final holding 103.9 units. At RM8 each the final marked value is RM831.20, a RM168.80 decrease from RM1,000; token quantity increased while ringgit value fell.

Exit conditions and loss allocation matter

Luno’s staking terms, last updated 11 September 2025, describe possible lock-in, warm-up and unstaking delays, and risks to rewards or principal from slashing. They state liability exclusions and exceptions: for the stated slashing exception involving intentional misconduct, gross negligence or intentional contractual breach, a potential claim lies against the validator provider. This does not establish an enforceable recovery outcome for a customer. Availability is not guaranteed, and service access can be restricted under stated conditions.

Across arrangements, ask who bears a validator penalty, code exploit, inaccurate price feed, custody failure or inability to withdraw. “Decentralised” does not answer who controls upgrades or provides recourse. A strategy combining a receipt token, loan and liquidity pool has several contracts and exits; a favourable token assessment cannot remove those extra obligations.

Sources: Luno staking terms · Aave health-factor and liquidation mechanics · Aave withdrawal conditions

Assess the asset, the activity and the actual version

The SC Shariah Advisory Council’s 2020 digital-assets resolution limits itself to assets under SC jurisdiction and contains conditions on proceeds, rights and benefits. It is not a blanket approval of offshore protocols, lending or every staking arrangement. The current Islamic capital market guidelines require a DAX operator proposing Shariah-compliant digital currency to seek SAC endorsement before offering it; that requirement does not, by itself, certify a separate yield contract.

Luno’s provider page says its ETH, SOL and ADA staking services are certified. We reopened the three linked original copies. Amanie’s ETH copy is dated 1 November 2024 with one-year validity and annual review; that initial period has passed and the checked copy does not establish renewal. Sharlife’s SOL copy is dated 9 October 2025 and ADA copy 15 October 2025, each with one-year validity, annual review/renewal and consistency/change-review conditions. The review date, 6 October 2026, falls before their one-year anniversaries, but this does not authenticate the current implementation or subsequent renewal.

The copies cover named Luno Malaysia services, not all uses of those assets. They also distinguish contractual structures: SOL describes investment agency and profit-sharing partnership; ADA describes agency and reward-for-service. The ADA copy states that no wakalah fee is charged; the public reward-service fee alone does not identify its contractual allocation or prove that the currently offered terms match the assessed documents. The provider’s general contract list should not be read as one identical contract for every asset. A public certificate image is evidence of its printed statement, not an audit of present operations. No new Shariah ruling is issued here.

For Muslim readers, the relevant question is whether the actual contract, reward source, fee, penalty and obligations fall within a valid assessment of that service and version. Non-Muslim readers may still use the same source-of-return and rights checks. Religious identity alone does not establish provider access: Luno’s account terms require, among other things, age 18 or above, capacity and verification; geography and service availability also matter. This guide decides no one’s eligibility.

Sources: SC SAC digital-assets resolution · SC Islamic capital market guidelines · Luno certification statement and originals · Ethereum certificate copy · Solana certificate copy · Cardano certificate copy · Luno Malaysia account terms

Figure 4. What still needs assessment?

Scope-and-risk map • passing one check does not pass the others

Asset statusSC-jurisdiction resolution and asset-level conditions. Not every use or offshore venue.
Arrangement / versionActual payer, contract, fees, penalty and redemption; named service certificate and assessed documents.
Certificate dateETH copy: 1 Nov 2024, initial one-year period passed. SOL: 9 Oct 2025 → anniversary 9 Oct 2026. ADA: 15 Oct 2025 → anniversary 15 Oct 2026. Review date: 6 Oct 2026.
Execution / access / recourseImplementation match and renewal not authenticated. Check custody, lockups, liquidation and permitted participation separately.

SC SAC resolution (2020), current ICM guidelines (30 March 2026) and original provider-published certificate images reopened 6 October 2026. Named Luno Malaysia services only; SOL/ADA have annual review/renewal and consistency/change-review conditions. No new ruling or current provider execution certification.

Sources: SC SAC digital-assets resolution · SC Islamic capital market guidelines · Ethereum certificate copy · Solana certificate copy · Cardano certificate copy

Full text alternative: Separate four checks: asset status within scope; the actual arrangement and version; the printed certificate date and conditions; actual execution, access and recourse. The ETH linked copy does not establish October 2026 renewal. SOL and ADA dates include this review date but do not establish implementation match or future renewal.

A practical checklist for any yield claim

The purpose is to understand a claim, not to select a platform or recommend participation. If the explanation cannot identify the source of reward and the obligations, a high percentage does not fill the gap.

Who pays: network, borrower, trader or incentive programme? Which token is paid?
What is the base, period and method of the percentage? Is it gross or already net?
Do you retain the asset, receive a pool/receipt claim, or take on a debt? Who holds the keys?
What charges, penalties, lockups and liquidity conditions affect exit?
Can interest, price feeds or changed thresholds make collateral eligible for liquidation?
What exact certificate, date, renewal and assessed documents cover this arrangement?

References

Dates below distinguish publication, printed revision/effectiveness and access. The source titles identify the originals; all diagrams and reader explanations are new editorial work. Original documents are linked externally. No PDF is hosted here.

Ethereum staking: How does it work? — ethereum.org contributor community. Displayed page update: 12 February 2025; body also refers to later Pectra changes. Accessed 6 October 2026. Used for validation/penalty/method distinctions only, not a live rate or every blockchain.
Supply Tokens — Aave. Undated live documentation, introduction; accessed 6 October 2026. Describes interest-bearing pool mechanics, not an approved Malaysian offer.
Borrow Tokens — Aave. Undated; introduction and rate/accrual explanation; accessed 6 October 2026. No transaction instructions or rate quotation reproduced.
Health Factor & Liquidations — Aave. Undated live formula/process page; accessed 6 October 2026. Example uses fictional MYR valuations, fixed debt and assumed 80% threshold; actual liquidation amount/bonus is not modelled.
Withdraw Tokens — Aave. Undated; introduction and collateral conditions; accessed 6 October 2026. Availability depends on pool liquidity and borrow exposure.
Fees — Uniswap Developers. Undated cross-version documentation; accessed 6 October 2026. Active-liquidity and fee rules; no universal pool fee quoted.
Understanding Returns (Uniswap v2) — Uniswap Developers. Undated; explicitly Uniswap v2; accessed 6 October 2026. Relative-to-holding risk only; not a model of all concentrated-liquidity positions.
Incentives (Aave V3) — Aave. Undated V3 contract documentation; accessed 6 October 2026. Configured reward rates/end dates; no active incentive campaign asserted.
Malaysia Staking Terms and Conditions — Luno. Last updated 11 September 2025; §§3–12; accessed 6 October 2026. Provider terms, not a guarantee of recovery or authenticated current execution.
Luno fees and limits in Malaysia — Luno. Undated live page; accessed 6 October 2026. Reward-fee basis and net estimated ARP; snapshot, not a promised future charge.
Malaysia Terms of use — Luno Malaysia Sdn. Bhd.. Last updated 14 May 2026; §§1/3/4/7; accessed 6 October 2026. Account/custody conditions; no individual eligibility or recovery verified.
Digital Assets from Shariah Perspective — Shariah Advisory Council, Securities Commission Malaysia. Meetings 29 June and 20 July 2020; publication/effective date not separately stated. Pages 1–4; accessed 6 October 2026. Limited to SC jurisdiction; not a ruling on every yield arrangement.
Guidelines on Islamic Capital Market Products and Services, SC-GL/1-2022 (R2-2026) — Securities Commission Malaysia. Revised/effective 30 March 2026, except a separate annual-declaration provision effective 1 January 2027. Chapters 26 and 38; accessed 6 October 2026. Framework, not proof of a named product’s approval.
Is Luno staking Shariah compliant? — Luno. Undated provider statement; accessed 6 October 2026. Linked copies inspected independently; broad wording does not establish current renewal or approval of every activity.
Luno Malaysia Ethereum staking — Shariah certificate — Amanie Advisors (provider-published copy). Printed issue date 2024-11-01. Initial one-year period has passed; annual review required. Renewal not established. Accessed 6 October 2026. Named Malaysian staking service only; public copy does not authenticate current implementation.
Luno Malaysia Solana staking — Shariah certificate — Sharlife (provider-published copy). Printed issue date 2025-10-09. Review date is within the printed one-year period; anniversary 9 October 2026. Annual review/renewal and unchanged assessed arrangements required. Accessed 6 October 2026. Named Malaysian staking service only; public copy does not authenticate current implementation.
Luno Malaysia Cardano staking — Shariah certificate — Sharlife (provider-published copy). Printed issue date 2025-10-15. Review date is within the printed one-year period; anniversary 15 October 2026. Annual review/renewal and unchanged assessed arrangements required. Accessed 6 October 2026. Named Malaysian staking service only; public copy does not authenticate current implementation.
How do my staking rewards work? — Luno. Undated live explanation; annual estimate, previous 30-day average and net fee basis; accessed 6 October 2026. No current reward rate or exact waiting time assumed.