Yield Mechanism Explanation

How sUSDi shares the protocol's inherent generated yield

Context

Users are able to receive a portion of the protocol's generated yield by staking their USDi and receiving sUSDi atomically in return.

Once users stake their USDi for sUSDi, they begin to accrue value without any further action or cost.

Overview

The amount of sUSDi a user receives is determined by how much USDi was transferred as well as when it was transferred. Injera's sUSDi utilizes a "Token Vault" mechanism, the same as Rocketpool's rETH or Binance's WBETH.

The protocol does not rehypothecate, lend out, or otherwise utilize deposited USDi for any purpose. There is no need for any such action, as the USDi backing mechanic inherently creates value.

This mechanism simply enables Injera to provide protocol yield to ecosystem participants without users having to do any action to "earn" it. The USDi value of sUSDi grows on its own. When a user unstakes his or her USDi, the user receives an amount of USDi equal to the initial amount staked plus their share of protocol yield deposited in the staking contract while that user's USDi was staked, as reflected in the value increase of sUSDi.

Important Notes

• The amount of sUSDi you receive when you stake USDi is likely to be less in number, but valued at the equivalent amount of USDi. This is a result of the "Token Vault" mechanism and the ratio defined below in the worked example.

• The value of USDi will remain worth the market trading price of USDi while sUSDi will grow in USDi value as the protocol deposits protocol yield in the staking contract daily.

• If the protocol were to suffer a loss due to funding or another reason, Injera's insurance fund would bear the cost, rather than the staking contract.

Users can only receive positive or flat value accrual while staking USDi; periods of negative protocol yield are not passed on to sUSDi. Injera's reserve fund bears associated costs if funding is so negative that it causes negative protocol yield.

Sample Calculation

sUSDi:USDi ratio = (total sUSDi supply) / (total USDi staked + total protocol yield deposited)