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Restructured from flat .tex/.pdf files into per-paper subdirectories. Added Antje Worring as co-author on all papers. Synced PDFs to pdfs/ for download site.
52 lines
2.5 KiB
TeX
52 lines
2.5 KiB
TeX
\section{Yield Composition}
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\label{sec:yield}
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%% =========================================================================
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Bridged assets are not idle. Locked assets on source chains are deployed to yield strategies, and the returns are reflected in bridge token share prices on destination chains via the \texttt{YIELD} wire tag.
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\subsection{Yield Layers}
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Teleport composes yield from three sources:
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\begin{enumerate}[nosep]
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\item \textbf{Babylon staking}: BTC locked on Bitcoin earns yield through Babylon's Bitcoin staking protocol. The MPC cluster delegates staked BTC to Babylon validators and collects rewards.
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\item \textbf{D-Chain LP}: Assets bridged to Lux D-Chain (the native DEX chain) are deployed to automated market maker pools, earning trading fees.
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\item \textbf{Bridge fees}: A portion of bridge fees (configurable per tenant) is distributed pro-rata to bridge token holders.
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\end{enumerate}
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\subsection{Share Price Mechanism}
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Bridge tokens on destination chains use a share-price model:
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\begin{equation}
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\mathrm{value}(s) = s \times \frac{p'}{10^{18}}
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\end{equation}
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where $s$ is the number of bridge token shares held and $p'$ is the current share price numerator. The share price only increases---the protocol never performs negative rebases.
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When yield accrues, the MPC attests to the new share price:
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\begin{algorithm}[H]
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\caption{Yield Attestation}
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\begin{algorithmic}[1]
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\Require Token $T$, new backing $B'$, epoch $e$
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\State $p' \leftarrow B' \times 10^{18} / \mathrm{totalShares}(T)$
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\State \textbf{assert} $p' \geq p_{\mathrm{prev}}$ \Comment{Monotonic share price}
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\State $\sigma \leftarrow \mathrm{ThresholdSign}(H(\mathsf{YIELD} \| C_s \| \nu \| T \| p' \| e))$
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\State Submit $(\mathsf{YIELD}, C_s, \nu, T, p', e, \sigma)$ to destination Teleporters
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\end{algorithmic}
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\end{algorithm}
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\subsection{xLUX}
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The xLUX instrument represents a claim on all three yield layers for LUX-denominated bridge positions. xLUX is minted when a user bridges LUX and opts into yield; the xLUX share price reflects accumulated Babylon rewards, D-Chain LP fees, and bridge fee distributions.
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\begin{equation}
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\mathrm{APY}_{\mathsf{xLUX}} = r_{\mathsf{babylon}} + r_{\mathsf{dchain}} + r_{\mathsf{fees}} - r_{\mathsf{slashing}}
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\end{equation}
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where $r_{\mathsf{slashing}}$ accounts for potential Babylon slashing events. The backing attestation mechanism (\S\ref{sec:security}) ensures that any slashing event is reflected in the share price within $\Delta_{\mathsf{stale}}$ seconds.
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%% =========================================================================
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