> 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/3.-the-yield-engine/return-generation.md).

# Return Generation

This page covers how Noon's yield is produced and how displayed APY is calculated.

## <mark style="color:$primary;">Where returns come from</mark>

Reserves backing <mark style="color:violet;">**$USN**</mark> are deployed across a **diversified strategy basket**: tokenised U.S. Treasury Bills, CLOs, Private Credit, DeFi lending, Principal Tokens, Looping, and Funding Rate Arbitrage (Perps). Each strategy is documented in [**The Yield Engine**](/3.-the-yield-engine/overview.md). The mix **shifts with market conditions**. The protocol does not rely on one return source.

## <mark style="color:$primary;">How the protocol's daily return is measured</mark>

Each day, the protocol measures **net return** against the value of managed assets. It annualises that result into the APY figures shown on [**app.noon.capital**](https://app.noon.capital/).

Each day, Noon calculates the distributable net return after Insurance and Operations allocations. The APY is calculated as:

<figure><img src="https://3816918787-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FL26rQzcNmiUZrCXkxkjS%2Fuploads%2F1VfSiEAVNfwAr7bydbMH%2FApyFormula.png?alt=media&amp;token=69207c87-8ac8-4ddb-a508-9ecb6f663104" alt=""><figcaption></figcaption></figure>

Because all reserve returns accrue to staked USN:

<figure><img src="https://3816918787-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FL26rQzcNmiUZrCXkxkjS%2Fuploads%2FwD03yIZ5PwzeWkuJwRWT%2FSusnApyFormula.png?alt=media&amp;token=18ae5d58-c183-4966-89d6-0c32e9b5b7ff" alt=""><figcaption></figcaption></figure>

The displayed 7-day and 30-day APYs are rolling averages of these daily sUSN APY figures over their respective periods.

<mark style="color:violet;">**$sUSN**</mark> holders receive returns from the **entire reserve**. Only staked <mark style="color:violet;">**$USN**</mark> shares in those returns. Therefore, <mark style="color:violet;">**$sUSN**</mark> APY exceeds the raw return on assets whenever some <mark style="color:violet;">**$USN**</mark> remains unstaked.

## <mark style="color:$primary;">Why 7-day and 30-day averages</mark>

The app shows **average APYs** rather than a single day's figure because daily returns are noisy. Strategy income does not arrive in a smooth line. A one-day snapshot can mislead in either direction. Averages give a fairer view of recent performance. They remain **backward-looking measurements**, not forecasts.

<mark style="color:purple;">**Noon**</mark> displays both 7-day and 30-day average APYs to allow users to see how its&#x20;

## <mark style="color:$primary;">The split (in short)</mark>

Distributable returns are split **80%** to <mark style="color:violet;">**$sUSN**</mark> holders, 10% to the Insurance Fund, and 10% to the Operations Fund. The Insurance Fund's share is **not a static destination**. Once contributions complete their seasoning period, surplus routes onward.

To read more about how <mark style="color:violet;">**Noon**</mark>'s return is distributed, see the [**Return Distribution**](/3.-the-yield-engine/return-distribution.md) page.