Share yield

Business Case:

• After tokenizing an asset and receiving investment, issuers can distribute yield to investors by using a staking protocol. This allows for ongoing engagement, as investors stake their received fractions to earn rewards, ensuring a long-term relationship between issuers and their community.
• Investors stake their fractions from an investment to claim rewards over a customizable timeframe, with yield shared by issuers in a token of their choice.
• The process involves distributing fractions via a token market, creating a staking pool with the fraction as the input token, and ensuring ongoing rewards distribution through a staking pool.

Sharing yield is a way for issuers to provide ongoing rewards to investors after an initial investment. Without sharing yield on an investment, the utility of tokenization becomes limited, as it restricts the potential for long-term engagement and value creation. By leveraging our Staking Protocol, investors can stake fractions of their holdings to earn rewards over time, unlocking the full potential of tokenized assets.

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Yield sharing provides a solution: Investors stake their fractions in a staking pool to earn yield from the fractionalized asset.

I. Creating a Staking Pool for Yield Distribution

1. Deploying a Market with Compliant Rules

Issuers need to deploy a market where the yield distribution will take place. They need to use ComPilot - Crypto AML Compliance Solution to ensure that investors meet the necessary regulations.

Issuers must select how rewards are computed, whether through single deposits, rate-based rewards, or complex distribution models:

• Single Deposit, a one-time deposit where rewards are given in a lump sum but distributed over a set time period, proportionally to participants based on how much they’ve staked and the duration of their stake.
• Multiple Deposit, similar to Single Deposit, but rewards are deposited into the pool at multiple intervals instead of just once. Each deposit is distributed proportionally to participants based on how much they have staked and for how long, over a specified time period.
• Rate-Based Rewards, Rewards are provided at a fixed rate per second, calculated based on the number of tokens staked by the user, independent of other users’ stakes. The reward rate is predefined by the staking platform, and rewards can be paid out instantly or at intervals, depending on the platform's configuration. For example, if the reward rate is 0.8 tokens per second, a user staking 100 tokens will receive rewards proportionate to their stake, without being affected by the stakes of others.
• Complex Reward Distribution, customizable reward systems, such as milestone-based rewards or tiered distribution.

How rewards are transferred to the staking pool:

• Transfer: The issuer can pre-fund the staking pool by transferring tokens directly into it.
• Minted: Alternatively, rewards can be minted at predefined intervals as they are distributed to investors.

2. Launching the Staking Pool

You can deploy multiple staking pools within a single market, all of which will follow the same overall rules. For each individual staking pool, you will need to define:

• The assets:
  • Input Asset, the token that investors will lock or stake in the staking pool.
  • Output Asset, the token or asset that investors will receive as their reward for staking.
• The timeframe:
  • Set specific start and end dates for the staking pool to define its duration.
  • Optionally, include a locking period that requires investors to keep their tokens staked for a minimum time before being eligible for rewards.
• Reward multipliers (optional):
  You can incentivize investors to stake more or longer by applying multipliers. These multipliers increase the rewards investors receive based on the duration of the stake or the amount of tokens they lock.

Staking to Earn Rewards

Once the staking pool is live, investors can begin staking their tokens to participate in the yield-sharing program. The process is straightforward:

1. Staking Tokens: Investors lock their input assets (tokens) in the staking pool.
2. Real-time Reward Tracking: The system automatically tracks their staked amount and the duration, calculating rewards as per the predefined distribution model.
3. Claiming Rewards: At the end of the staking period, or when conditions are met, investors can claim their output assets as rewards.

Topping Up the Yield Pool

If you decide to go with Multiple Deposit, issuers must ensure that the yield pool remains funded for the continued distribution of rewards. This involves the following steps:

1. Collecting Rewards Off-Chain: The issuer may accumulate rewards from off-chain sources, such as business operations or revenue streams.
2. On-Ramping Rewards to Crypto: The issuer then converts these off-chain rewards into blockchain-compatible tokens.
3. Topping Up the Staking Pool: Once converted, the issuer deposits these tokens into the staking pool, ensuring that sufficient yield is available for distribution to the stakers.