Native Yield Usage

Orbit makes indirect use of Blast's native yield to provide incentives to lenders and borrowers. Specifically, the protocol first collects all native yield from the posted Blast assets of lenders and collaterals of borrowers, routes the yield value to the Orbit token, and then uses the distribution of Orbit tokens as incentives to lenders and borrowers.

This apparatus is said to be an "indirect" method of Blast's native yield to Orbit's lenders and borrowers as the native yield first collects to give value to the Orbit token, whose value is then used as lend / borrow incentives. The Orbit token acts as a medium to forward future native yield to the present, thereby alleviating the issue of cyclicality when attempting to directly use native yield as lend / borrow subsidies in an ecosystem where native yield is present to all by default.

Collection of Native Yield

Native yields of ETH and USDB assets lent out / posted as collateral to Orbit are not given out to lenders or borrowers but instead are accumulated to the native yield pool.

The native yield pool is a balance of ETH and USDB assets sourced from native-yield-accruing assets posted to Orbit. Assets in the native yield pool are used to make periodic purchases of the Orbit token from the open market, such as a DEX.

Transfer of Native Yield Value to the Orbit Token

Orbit tokens purchased with collected native yield are then used to transfer value back to the Orbit token. This is conducted with two mechanisms:

  • Distribution as rewards to ORBIT stakers

  • Burned and removed from circulation

The proportion of ORBIT distributed as staking rewards vs. burnt changes as the protocol matures. Initially all purchases Orbit tokens are distributed to stakers, with none being burnt. The protocol then linearly increases the percentage of tokens that are burnt over a period of 4 years, until all purchased tokens are being burnt and none are distributed as staking rewards.

For example, after 2 years of protocol inception, 50% of purchased tokens will be distributed as staking rewards and the remaining 50% will be burnt out of circulation.

This slow transition aims to achieve two goals:

  • Provide clear value to ORBIT initially via (relatively) predictable value from staking rewards

  • Remove tokens introduced from supply inflation in the long run

The distribution rate of ORBIT to stakers is determined based on the staker's stake amount and their locking period, in a way that stakers that chose to lock up their tokens for a longer period are given a higher rate of reward distribution.

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