Yield Distribution

Yield distribution is the process by which the earnings generated from the protocol's strategies are delivered to the holders of Avant's yield-bearing tokens (e.g., savUSD, avUSDx).

The protocol operates on a weekly cycle, referred to as an epoch. However, the distribution frequency varies between the Senior Tranches (e.g., savUSD) and the Junior Tranches (e.g., avUSDx).

Yield Redistribution: The Junior Tranche Advantage

The Junior Tranche (e.g., avAssetX) is structured to receive a higher yield than the Senior Tranche (e.g., savAsset) in exchange for its role as the primary loss-absorption layer. This augmented yield is sourced from three distinct mechanisms:

1. Baseline Yield: All capital in the protocol (both Senior and Junior Tranches) earns the underlying base yield generated by the corresponding main strategy.

2. Structural Yield Redistribution: The Junior Tranche receives an additional yield allocation equivalent to 10% of the total yield generated by all capital committed to the main strategy in the protocol. This entire portion is redistributed exclusively among the committed Junior Tranche capital.

3. Active Capital Productivity: The underlying capital in the Junior Tranche can be utilized in separate DeFi strategies to generate extra yield.

4. Protocol Treasury Contributions: On rare occasions, the protocol treasury may contribute additional yield when considered appropriate.

Distribution for Senior Tranches

The yield for Senior Tranche tokens is distributed in daily increments to provide a smooth and consistent appreciation in value.

• Weekly Calculation: The distribution cycle is anchored to a weekly epoch that begins each Thursday. At this time, the total yield generated during the previous week is calculated and finalized.

• Daily Value Accrual: This finalized weekly yield is then divided and distributed in portions each day. The daily distribution process is initiated at approximately 11:59 UTC. This daily value transfer increases the underlying value of savAssets (e.g., savUSD), meaning the amount of the corresponding avAsset (e.g., avUSD) they can be redeemed for increases daily.

Distribution for Junior Tranche

In contrast to the daily accrual for the Senior Tranches, the yield distribution for avAssetX tokens follows a weekly schedule.

• Weekly Distribution: Yield earned by the Junior Tranche is calculated and distributed once per week, on Thursdays, coinciding with the start of the new epoch.

• User Impact: This means the value of an avAssetX token reflects its earnings in a single, weekly update rather than through incremental daily increases.