Risk/reward ratio

[crwth]

Aren't high APY coins subject to some regulations? For me, I see it as a Too good to be true type of thing that you just HODL, and then you would earn a lot.^{(depending on the amount of deposit you would have)}

Sometimes I thought about this yield stuff becoming more centralized, with the balance they own, and depending on the chain, they could dominate governance. There would be more power with the big validators. Just my thoughts.

[TastyChillySauce00]

Aren't high APY coins subject to some regulations? For me, I see it as a Too good to be true type of thing that you just HODL, and then you would earn a lot.^{(depending on the amount of deposit you would have)}

Yes it is regulated especially in the US, even stablecoin's passive yield is banned after the CLARITY Act, outside the US there are rules here and there about licensing, and so on especially in the EU with MiCA.
The key is to keep the coin from being classified as securities such as giving High APY with fixed returns and guaranteed yield. It's a lot of thing to talk to when it comes to regulation for a high APY coin.

Most sustaining staking activities are usually only giving 1% - 3.5% APY more or less the same as yield you'd get in traditional finance, the other offering higher APY comes with risk.
Some project just ignore the regulation by excluding certain region as far as I know to bypass the need for a complex legal drafting process.