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  1. Home
  2. /Glossary
  3. /Risk-Free Rate
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traditional-finance

Risk-Free Rate

The theoretical return on an investment with zero risk, typically represented by government treasury yields.

Definition

The theoretical return on an investment with zero risk, typically represented by government treasury yields. In crypto, the closest equivalent might be staking yields on established networks or lending rates for top stablecoins. DeFi yields above the risk-free rate should imply proportionally higher risk.

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Related Terms

Treasury Bonds

Debt securities issued by the US government.

Yield

The income earned on an investment, expressed as a percentage.

Risk Management

Strategies for limiting potential losses in your investments.

Accredited Investor

Someone who meets specific income or net worth thresholds set by regulators, qualifying them for investments not available to the general public.

Anti-Money Laundering (AML)

Laws and procedures designed to prevent criminals from disguising illegal funds as legitimate income.

Asset Allocation

How you divide your investments across different asset classes like stocks, bonds, crypto, and cash.

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