# Strategies: where yield is generated

A strategy is the actual “investment engine” inside the vault.

It defines how capital is used to generate yield — for example by lending assets, providing liquidity, or using structured positions.

In practice, this means allocating assets into on-chain mechanisms such as lending markets or liquidity pools. Each mechanism produces returns differently and introduces its own set of risks.

The most common strategy types include:

**Lending strategies**

Assets are supplied to lending protocols and generate yield from borrower interest.

**Liquidity provision strategies**

Assets are deposited into decentralized exchanges, earning yield from trading fees and, in many cases, additional incentive rewards provided by the protocol. 

**Leverage-based strategies**

Capital is actively reused to enhance returns. For example, a stablecoin may be deposited, borrowed against, and redeployed to earn yield on the spread. This increases potential returns, but also introduces additional risks such as liquidation exposure.

Some strategies may be deployed across multiple blockchain networks. This is not a separate strategy type, but an execution layer.

The same strategy — for example lending stablecoins — may produce different yields depending on where liquidity demand is highest. Shift evaluates these differences and allocates capital accordingly within defined risk limits.

Before any strategy is deployed, it must pass a structured internal framework:

* due diligence
* risk rating
* allocation limits
* monitoring configuration
* predefined exit pathways

Shift prioritizes sustainable, risk-aligned yield over short-term spikes.

<br>


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.shiftdefi.com/user-docs/invest-with-confidence/the-platform/strategies-where-yield-is-generated.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.