papers/lux-omnichain-yield/lux-omnichain-yield.tex

\documentclass[11pt,twocolumn]{article}

% ============================================================
% Packages
% ============================================================
\usepackage{../shared/luxcover}
\usepackage[utf8]{inputenc}
\usepackage[T1]{fontenc}
\usepackage{lmodern}
\usepackage{amsmath,amssymb,amsthm}
\usepackage{mathtools}
\usepackage{bm}
\usepackage{algorithm}
\usepackage{algpseudocode}
\usepackage{graphicx}
\usepackage{booktabs}
\usepackage{hyperref}
\usepackage{xcolor}
\usepackage{listings}
\usepackage{enumitem}
\usepackage{caption}
\usepackage{subcaption}
\usepackage{tikz}
\usepackage{pgfplots}
\usepackage{array}
\usepackage{multirow}
\usepackage{float}
\usepackage{tabularx}
\usepackage{siunitx}
\pgfplotsset{compat=1.18}
\usetikzlibrary{arrows.meta,positioning,shapes.geometric,fit,calc,decorations.pathreplacing}

\hypersetup{colorlinks=true,linkcolor=black,citecolor=blue,urlcolor=blue}

% ============================================================
% Language definitions for listings
% ============================================================
\input{../shared/lstlang}

% ============================================================
% Listings config
% ============================================================
\lstset{
  basicstyle=\ttfamily\scriptsize,
  breaklines=true,
  frame=single,
  numbers=left,
  numberstyle=\tiny\color{gray},
  keywordstyle=\color{blue!70!black}\bfseries,
  commentstyle=\color{green!50!black}\itshape,
  stringstyle=\color{red!60!black},
  showstringspaces=false,
  tabsize=2,
}

% ============================================================
% Theorem environments
% ============================================================
\newtheorem{theorem}{Theorem}[section]
\newtheorem{lemma}[theorem]{Lemma}
\newtheorem{proposition}[theorem]{Proposition}
\newtheorem{corollary}[theorem]{Corollary}
\newtheorem{definition}{Definition}[section]
\newtheorem{property}{Property}[section]
\newtheorem{remark}{Remark}[section]
\newtheorem{invariant}{Invariant}[section]

% ============================================================
% Title
% ============================================================
\title{\textbf{Yield-Bearing Bridge Tokens: Cross-Chain Capital\\Efficiency through Composable Yield Strategies}\\[6pt]
\large Lux Teleport Omnichain Yield Protocol}

\author{
Zach Kelling\thanks{Corresponding author: [email protected]}
\quad
Vishnu Seesahai\\
\textit{Lux Industries, Inc.}\\
\texttt{[email protected]}
}

\date{2024 (Revised December 2025)}

\begin{document}

\luxcoverpage

\twocolumn[
\begin{@twocolumnfalse}
\maketitle

\begin{abstract}
Over \$15 billion in assets are locked across cross-chain bridges, yet these assets earn zero yield---a capital inefficiency exceeding \$600 million per year in forgone staking and lending returns at prevailing rates.
We present the Lux Teleport Yield Protocol, a system that deploys locked bridge assets into yield-generating strategies on their source chains and reflects accrued yield in bridge token share prices on destination chains through ERC-4626-inspired share accounting.
The protocol defines a composable \texttt{IYieldStrategy} interface implemented by 29 strategies across 9 categories: liquid staking, restaking, lending, stablecoin yield, LP/DEX, Bitcoin-native yield, Solana DeFi, TON DeFi, and perpetuals.
We formalize share price dynamics, proving that the share price $p(t)$ is monotonically non-decreasing under non-negative yield and bounded below by the collateralization invariant $p(t) \geq 0.985$.
An MPC-attested backing oracle reports aggregate strategy positions at configurable intervals; if the attested backing falls below 98.5\% of outstanding shares, all bridge operations halt automatically.
We introduce a three-tier risk framework with per-tier allocation caps, analyze the xLUX economic flywheel where protocol fees compound across bridge, DEX, lending, perpetuals, and NFT AMM, and demonstrate that yield-bearing bridge tokens (yLETH, yLBTC, yLUSD) achieve 4.2--23\% APY compared to 0\% for conventional wrapped assets.
The Bitcoin-native yield composition---Babylon staking layered with restaking and DeFi---represents, to our knowledge, the first protocol enabling native BTC yield without custodial wrapping.
\end{abstract}
\vspace{1em}
\end{@twocolumnfalse}
]

% ============================================================

\input{sections/01-introduction}
\input{sections/02-problem-statement}
\input{sections/03-share-based-accounting}
\input{sections/04-yield-strategy-interface}
\input{sections/05-bitcoin-native-yield}
\input{sections/06-mpc-yield-attestation}
\input{sections/07-risk-framework}
\input{sections/08-economic-analysis}
\input{sections/09-performance-fee-mechanics}
\input{sections/10-formal-security-properties}
\input{sections/11-implementation}
\input{sections/12-related-work}
\input{sections/99-conclusion}

\end{document}