USDC Lending Vault Yield Explained

The stablecoin lending vault will be used to fund the GLP leverage vault. The source of the lending vault yield is the yield from GLP itself. As the stablecoin lending vault is taking less risk, the vault will take a share of between 40% to 60% of the yield from GLP. The GLP yield that will be accrued to the stablecoin lending vault is based on the following formula:

Total yield accrued to Stablecoin Lending vault = U * S * G

U = Utilisation of the stablecoin lending vault; a percentage from 0% to 100%

S = The vault's share of the GLP yield; a percentage from 40% to 60%

G = GLP's Yield

The share of GLP's yield is computed using the following model:

If U < 95%, S = 40%

If 95% < U < 99.5%, S = 4.444U - 3.8222

If U > 99.5%, S = 60%

Based on this model, if the utilisation U is somewhere in between the range of 95% to 99.5%, the share of GLP yield will range between 40% to 60%.

Example, optimally( U >99.5%) a user would get 162.5% yield. Hence if he makes 10% without leverage, he now makes 16.25%

  • 100% (principal 1x)

  • 62.5% (nett of leverage yield, which is 50% of 1.25x borrowing yield) (50% comes from 60% - 10% fees)

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