Where the Yield Comes From
Interest on the escrow, paid to the people holding USDλ.
The USDC that backs USDλ does not sit idle in the vault. It is put to work in low-risk, interest-bearing positions, and the realised interest is distributed back to USDλ holders. That is the yield — an estimated 5% APY at today's rates.
Who receives it
Each distribution is split four ways:
| Share | Goes to |
|---|---|
| 60% | Holders — depositors in the exchange and sUSDλ holders |
| 20% | Provers, for producing block proofs |
| 10% | The insurance fund that backstops the exchange |
| 10% | The treasury |
The 60% for holders is divided between the exchange's depositors and sUSDλ holders in proportion to how much USDλ each pool holds — not a fixed ratio, but measured fresh at each distribution.
Until the insurance fund reaches its target, distributions are diverted to it in full — holders, provers and the treasury begin to receive their shares only once the fund is capitalised. This is a one-time bootstrap, not an ongoing charge.
Earning while you trade
Inside the exchange, yield is credited on your whole balance — the part backing open positions as well as the part sitting free. On most venues, margin earns nothing; here it keeps earning until the trade closes and after.
Only what has arrived
Only interest that has actually been received is distributed — spendable USDC the vault holds, never a mark-to-market gain. Unrealised gains are never paid out, so there is never a claim on money that has not arrived. A cap on the distribution rate (50% APR) is a tripwire: a distribution larger than the interest could plausibly be is throttled to a trickle and flagged for the operator, rather than silently creating USDλ the escrow cannot cover. And because the settlement contract can only pay out USDC it actually holds, an over-distribution would surface as a failing withdrawal, not as a quiet shortfall.
The APY figure is an estimate. Yield depends on interest actually realised on the escrow, varies over time, and is not guaranteed.