Yield & LP Rewards
Sustainable yield and sustainable LP rewards
Single-stake and LP-stake nuMoney for sustainable, real yield
The numa protocol is able to pay sustainable, real yield to both nuMoney LP stakers and single-side stakers of nuMoney synthetics. nuMoney LP stakers are those who contribute to a liquidity pool such as nuGOLD/rETH, while single-side stakers would be staking $nuGOLD by itself.
This yield comes from two different sources:
Buy and sell vault fees; and,
LST-yield
(1) In each vault transaction—whether a buy or sell—20% of the fee (1% nominal) is sent to a rewards contract that accrues these fees. (2) The vault is comprised of rETH tokens. rETH represents staked ETH that accrues ETH value at about 3-4% annually. At some interval, the protocol extracts rETH from the vault that represents the yield value accrued and sends it to the rewards contract.
Both (1) and (2) are pooled and distributed to nuMoney LP stakers and single-stakers of nuMoney synthetics. Unlike other protocols which often reward LPs or single-stakers through unsustainable, "printed" token emissions that inflate the supply and are limited in number, numa rewards are part of the protocol structure and are sustainable: they don't inflate the supply and can't run out.
How much yield might be expected? The vault launched on March 5th, 2024 and accumulated yield at about 20% APR through April 15th, 2024. This 20% APR represents yield accrued over the entire value of the vault, but it is actually distributed at a higher rate than this, since the entire vault value isn’t staked for rewards. We also expect to pay about two-thirds of the total rewards to LP stakers and the remaining third to single-stakers. So, how does this work?
Let’s assume that the entire value of the vault (e.g., $1,000,000) is earning yield at the above rate of 20% APR.
Of the $1,000,000, let’s say 30% represents outstanding nuMoney synthetics.
Of that 30%, we can assume that maybe two-thirds is either single-staked or LP staked (20% of the total vault value).
So, this means that the 20% APR accrued by the entire vault value would pay about 100% APR (5x) to the LP stakers and single-stakers.
However, we need to adjust for the two-thirds ratio for LP stakers. So, that would mean ~66% APR for single-stakers and ~66% APR for LP stakers, since 1/2 of an LP position is held as nuMoney.
Staking and liquid staking
nuMoney holders can single-stake their synthetics to earn sustainable yield. Yield is distributed in kind with the asset that is staked—e.g., $nuUSD stakers earn $nuUSD, and $nuBTC stakers earn $nuBTC. Rewards are updated dynamically as they become available through LST and vault fees, so that stakers can claim and/or unstake their assets at will.
Additionally, when users stake their nuMoney, they mint a value-accruing token to represent their staked position, in a similar manner to liquid staking tokens, such as rETH. For example, users can stake $nuUSD and receive $nuUSDe, which will accrue value based on the yield gained from staking. As such, $nuUSDe is not a stablecoin; instead, it will continually accrue value above $1. These tokens are fully composable and fungible and can be used in other protocols to increase yield even further.
Last updated
