> For the complete documentation index, see [llms.txt](https://docs.noon.capital/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.noon.capital/1.-noon-the-basics/how-it-works.md). # How It Works This page walks through the moving parts of Noon: the tokens, how yield is generated and distributed, and how the pieces fit together. ## The tokens **Noon** has **four tokens**. Two are about **holding value and earning**. Two are about **governance**.
TokenWhat it's forGovernance rights
$USNThe dollar-pegged stablecoin. Holds value, earns the most Noon PointsNo
$sUSNStaked $USN. Accrues the protocol's yield + (limited) Noon PointsNo
$NOONThe governance token. Able to be earned (via Active Stake, Open Stake), and bought (on CEXes and DEXes)No
$sNOONStaked $NOON. Carries voting power, earns rewards via Noon Buyback ProgramYes
**$USN** is the foundation for the protocol at large. Stake **$USN** (via Active Stake or Open Stake) to get **$sUSN**, or buy **$sUSN** directly, and start earning yield. **$NOON** is the foundation for the protocol's governance. Stake **$NOON** to get **$sNOON**. **$sNOON** grants you voting power, enabling you to participate in **Noon**’s Governance Forum and contribute to the future of the protocol, as well as access to more rewards. Unstaking **$sUSN** to receive **$USN** is simple - only subject to a cooldown. Unstaking **$sNOON** to receive **$NOON** may result in the loss of some or all of **$NOON** rewards, subject to the rules on [**Staking Framework**](/4.-usdnoon/the-staking-framework.md). More details on each: [**$USN**** and ****$sUSN**](/2.-usdusn-and-usdsusn/usdusn-and-usdsusn.md) and [**$NOON**** and ****$sNOON**](/4.-usdnoon/overview.md). ## How yield is generated The dollars backing **$USN** (and **$sUSN**) are deployed across a diversified set of income-generating strategies rather than sitting idle. These include U.S. Treasury Bills, CLOs, private credit, DeFi lending, and others, each chosen and weighted to balance return against risk. Every strategy is named and explained in [**The Yield Engine**](/3.-the-yield-engine/overview.md). ## How returns are distributed The protocol's returns are split in three ways: * **80%** to **$sUSN** holders * **10%** to the Insurance Fund * **10%** to the Operations Fund These three shares sum to **100%** of the protocol's distributable returns. The portion distributed to **$sUSN** holders increases the value of **$sUSN** daily; the other two portions fund the protocol's **safety buffer** and its running costs. Full detail on [**Return Distribution**](/3.-the-yield-engine/return-distribution.md). ### The Insurance Fund The Insurance Fund is the protocol's **safety buffer**. Each month, **10%** of raw protocol returns are sent to the Insurance Fund. These funds are used primarily to absorb daily volatility and cover insurance deductibles. That capital is seasoned in the Insurance Fund for **12 months**. After seasoning, the Insurance Fund uses the capital to buy back **$NOON** from the open market. The bought-back tokens are then distributed **pro rata** to **$NOON** holders. The result is a direct yield stream for **$sNOON** holders, and added utility to our governance token. ### The Operations Fund The **Noon** Operations Fund receives 10% of protocol yield. It uses these funds to cover the costs of **Noon**'s operations. After covering these costs, and building up a 12m operating reserve, the **Noon** Operations Fund will re-direct all excess funds to the **Noon**** Insurance Fund** on a monthly basis. ## Token value propositions **Value proposition of ****$USN**: **$USN** holders **forgo rights to raw yield** generated by deposited collateral. Instead, they receive a **disproportionate governance token reward**. Holders of **$USN** benefit if the **Noon** governance token appreciates, and from rewards that accrue to the staked governance tokrn. **Value proposition of ****$sUSN**: **$sUSN** holders receive the **majority of yield** generated by deposited collateral. This yield is boosted by the yield foregone by **$USN** holders. **$sUSN** holders also receive governance tokens, so they can participate in **Noon** governance. **Value proposition of ****$NOON**: **$NOON** holders will be able to stake their tokens to receive **$sNOON**. **Value proposition of ****$sNOON**: **$sNOON** holders will be able to vote on all **Noon** governance proposals, like the addition of new delta neutral strategies to the protocol. **$sNOON** holders will receive rewards from Active Staking and Open Staking programs. **$sNOON** holders will also benefit from the **$NOON** buyback program. ### Points and boosts **Points program**: **Noon** now has a live points program, where holders of **$USN** and **$sUSN** are rewarded for their token balances and on-chain activity. **Noon** **points** accrue **in real time** and are displayed directly within the **Noon**** App**. These points are the **primary mechanism for early community participation**. When the **Noon** governance token TGE took place in **Q2 2025**, all participants became able to convert earned **Noon** **points** into **Noon** tokens. **Point boosts**: Users will be able to "boost" the points they receive by participating in activities with our partners, like providing **$USN** and **$sUSN** liquidity on DEXes, or depositing **$USN** as collateral on lending protocols. **Token boosts**: When converting points to tokens, users will be able to choose to stake their tokens for up to 12 months to receive significant additional token rewards.