Earning Yield
How Ike facilitates yield back to stakers.
Last updated
How Ike facilitates yield back to stakers.
Last updated
Each , there is a certain fixed amount of yield generated by the network in the form of newly generated AZERO. The rate of yield is set by the network.
The yield accrues to the Validators, which must return it back to the Vault
. This part is enforced by a mixture of Ike's smart contracts and blockchain-native mechanisms.
However, while the number of AZERO staked with the Vault
increase, the number of outstanding sA0 does not. Remember, sTokens represent a share of the Total Pool of AZERO () controlled by the Vault
. So, when the user redeems their sA0 for AZERO, they will receive more AZERO than they originally deposited.
This was a very simplified example. It doesn't account for any Protocol fees, and it doesn't account for other users staking and unstaking their tokens over time. However, it illustrates well the mechanism by which Ike helps users generate yield on their tokens. The example shows how yield came from the network's natural rate of AZERO inflation, and Ike helped the user access it easily.
Ike's sA0 tokens are fungible, and therefore allow users to participate in other network activities, such as DeFi. Many DeFi products allow users to earn additional yield through processes of lending, trading, and more. So, users who use sTokens to earn yield in DeFi can also take advantage of the network's natural staking yield at the same time. This is what we call composable yield.