Staking Mechanics

sOUSD Creation:

  • When users stake their OUSD, they receive sOUSD in return. The rate at which OUSD is converted into sOUSD is initially set at 1:1. As yield accrues in the backing reserves allocated to the staking vault, the value of sOUSD relative to OUSD increases.

Yield Accrual:

  • Yield from the invested backing reserves increases the value of the total staked pool. This is reflected in the sOUSD to OUSD exchange rate, which adjusts upward as more yield is generated. Essentially, the longer or the more OUSD one stakes, the greater their proportionate share of the accrued yield.

Exchange Rate Adjustment:

  • The key to understanding the yield mechanism lies in how the sOUSD/OUSD exchange rate is adjusted. The rate adjustment is based on the total yield accrued to the staking vault, divided by the current supply of sOUSD. This method ensures that the yield distribution is proportional to each staker's contribution.

Last updated