Return generation

This section details how Noon generates return for our users

Noon generates returns by deploying the collateral received via the minting process to a basket of delta neutral strategies.

First, our traders select a basket of delta-neutral strategies which meet our criteria:

• They generate top-tier returns across market conditions

• They have sufficient capacity, allowing us to deploy capital at scale

• Deployment can be automated

• Any trading, operational, technological or other risks arising from deployment can be mitigated

We will constantly review this list of strategies, and bring the best into our ecosystem to maximise protocol returns for our users.

Once we have selected our strategies, we intelligently allocate to them based on a variety of factors like historic returns / volatility, current market conditions, market forecast, technical signals, etc. We regularly review our allocation strategy and optimise capital deployment to maximise revenue.

Noon intelligently allocates between multiple deployment strategies, such as T-bills, CLOs and Private Credit Funds. More on this on Our deployment strategies.

New strategies are being introduced, in which, the community gets to vote for in Noon's governance forum.

How we calculate our APYs

The calculation of sUSN returns begins with the gross return, which is the total profit generated across all deployment strategies on a given day (for a breakdown of all strategies, see Our deployment strategies). From this gross return, we deduct 10% which is allocated to the insurance fund and 10% which is allocated to Noon’s operations fund. The remaining 80% is the net return for that day (see Return distribution for details).

We then normalise the net return by dividing it by the total USN supply at the end of the previous day:

r_USN,day = Net Return (day) / TVL (EOD yesterday)

This daily return is compounded to arrive at the Annualized Percentage Yield (APY):

apy_USN = (1 + r_USN,day) ^ 365 - 1

Since yield is distributed exclusively to people who have staked their USN, we adjust the APY by the ratio of total USN supply to staked USN supply:

apy_sUSN = apy_USN * (TVL (EOD) / Staked USN (EOD yesterday))

This final figure represents the sUSN APY, i.e. the effective return accruing to sUSN holders. Noon shows the 7-day and 30-day averages of this APY on app.noon.capital.

How we calculate our APYs

The calculation of sUSN returns begins with the gross return, which is the total profit generated across all deployment strategies on a given day (for a breakdown of all strategies, see Our deployment strategies). From this gross return, we deduct 10% which is allocated to the insurance fund and 10% which is allocated to Noon’s operations fund. The remaining 80% is the net return for that day (see Return distributionfor details).

We then normalise the net return by dividing it by the total USN supply at the end of the previous day:

r_USN,day = Net Return (day) / TVL (EOD yesterday)

This daily return is compounded to arrive at the Annualised Percentage Yield (APY):

apy_USN = (1 + r_USN,day) ^ 365 - 1

Since yield is distributed exclusively to people who have staked their USN, we adjust the APY by the ratio of total USN supply to staked USN supply:

apy_sUSN = apy_USN * (TVL (EOD) / Staked USN (EOD))

This final figure represents the sUSN APY, i.e. the effective return accruing to sUSN holders. Noon shows the 7-day and 30-day averages of this APY on noon.capital.