Yield Distribution

Wrapping Rate Calculation

As part of the FW reserve is rehypothecated (see Rehypothecation), the wrapping rate for FW/USDC increases as the rehypothecated reserve increases in value.

$$\mu(t)=max\left( \frac{Reserve(t)}{Supply_{FW}(t)},\mu(last(t)) \right)$$

This is updated as the value of the reserve increases from rehypothecation. And if a bad debt loss is incurred, the rate stops accruing and does not increase until the loss is recouped.

CT Claimable Yield

Distribution of this yield from rehypothecation to CT is processed for every interaction of CT (transfer, etc.). Like so, based on the rate, we calculate a portion of the FW to take from the market and distribute to CT holders.

$$CT_{claim}(t)=\left(1 - \frac{\mu(last(t))}{\mu (t)} \right) \times Supply_{FW}(t)$$

The FW which is associated with the gain from reserves made from the last distribution to this distribution is distributed to CT holders and the rest of the FW represents the principal reserve.

This claim is then proportionally allocated as a claimable yield to CT holders based on holdings at the time of processing.