Yield Flow

How yield moves from source to your cHYPE.

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Diagram

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Step by Step

Step 1: User Deposits HYPE

User sends HYPE to Vault
  └── Vault receives HYPE
  └── cHYPE minted at current exchange rate
  └── User receives cHYPE

Example: User deposits 1,000 HYPE when exchange rate is 1.05. They receive 952.38 cHYPE (1000 / 1.05).

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Step 2: Vault Allocates HYPE

Vault allocates capital:
  ├── 20-30% → Validator staking (liquidity buffer)
  └── 70-80% → HIP-3 markets (yield generation)

Allocation percentages may vary based on:

• Redemption demand
• Market opportunities
• Risk management

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Step 3: Yield Accrues

Yield flows in from:
  ├── Staking rewards: claimed daily
  ├── Builder fees: distributed per epoch (varies by market)
  └── Token incentives: held in treasury

Different yield sources have different timing:

• Validator rewards: continuous
• HIP-3 fees: epoch-based (market dependent)

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Step 4: Protocol Fee Deducted

Gross yield received
  └── Protocol fee deducted (15% of yield)
        ├── 90% → Compost operations
        └── 10% → Infrastructure partner

The 15% fee is taken on yield only — not on principal.

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Step 5: Net Yield Compounds

Net yield (85%) enters vault
  └── Vault HYPE balance increases
  └── cHYPE exchange rate increases
  └── All cHYPE holders benefit proportionally

No action required. cHYPE automatically appreciates.

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Exchange Rate Example

Time	Vault HYPE	cHYPE Supply	Exchange Rate
Day 0	1,000,000	1,000,000	1.000
Day 30	1,010,000	1,000,000	1.010
Day 60	1,020,100	1,000,000	1.020
Day 90	1,030,301	1,000,000	1.030

Your cHYPE balance stays constant. Its value in HYPE increases.

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INFO

Next: Allocation