Protocol Revenue Explanation
Sustainable & Transparent
The revenue generated by the protocol originates from three main sources:
Funding and Basis Spread from Delta Hedging Derivatives Positions
The protocol hedges backing assets by opening short derivatives positions, capturing funding rate and basis spread yields.
Historically, the imbalance in demand and supply for leverage has resulted in positive funding rates, benefiting delta-neutral strategies.
Approximately 70% of the protocol’s backing assets (including staked assets) will be allocated to this strategy.
Liquidity Provision in Decentralized Exchanges (DEXs)
A portion of the backing assets is allocated to liquidity pools in decentralized exchanges, generating yield through trading fees and incentives.
Providing liquidity to stablecoin pairs ensures efficient market operations and enhances the protocol’s revenue stream.
Staking Rewards from Backing Assets
The protocol stakes assets such as ETH or BTC to earn rewards at both the consensus and execution layers.
Staking income includes block rewards, transaction fees, and MEV revenue from network participation.
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