Protocol Revenue
Understanding Hylo’s revenue streams from fees and LST yield
Hylo is designed to generate revenue through two main channels: mint/redeem fees and LST yield produced by the collateral pool.
LST Yield
The LSTs held in collateral pool are projected to yield a base APY between 8-11%. A large majority of this yield is allocated to those participating in the stability pool, with the remainder serving as a direct source of revenue for Hylo’s treasury.
Mint/Redeem Fees
Minting and redemption fees are the protocol’s primary revenue stream. All trading transactions incur a fee on the order of basis points, with fees varying depending on health of the protocol. See Risk Management for an overview of the fee structure.
As hyUSD gains distribution as a quoted asset for token pricing, the fee revenue stream may become more important than staking yield. Increased usage will create more arbitrage opportunities, leading to higher minting and redeeming volumes.