> For the complete documentation index, see [llms.txt](https://abrafi.gitbook.io/abrafi-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://abrafi.gitbook.io/abrafi-docs/solutions/protocol-revenue.md). # Protocol Revenue There are three primary revenue streams that generate yield for the protocol. Revenue streams are modeled for sustainability and diversified risk. 1. Funding and basis spreads from derivatives positions 2. Rewards from staked assets consensus and execution layer 3. Liquid stablecoin backing rewards #### Funding and basis spreads from derivative positions The basis spread refers to the difference between the spot price of a crypto asset (BTC, SOL or ETH) and its price in the futures market. * **The Setup:** The protocol takes a portion of the collateral (e.g., USDC provided by users to mint USDaf) and splits it into a two-part, delta-neutral position: 1. Buy the crypto asset (e.g., Spot ETH) on the spot market. 2. Simultaneously sell (short) an equivalent amount of calendar futures contracts expiring at a future date. * **The Harvest:** Because the futures contract was sold at a premium to spot, that premium is mathematically guaranteed to decay to zero as the contract approaches its expiration date (spot and futures prices converge). * **The Outcome:** The protocol locks in this absolute price difference as revenue regardless of market direction. ``` [User Deposits USD/USDC] ──> [Mint Yield Stablecoin] │ ▼ [Delta-Neutral Execution] ├── Buy Spot Asset (e.g., ETH) └── Short Derivatives (Perps/Futures) │ ▼ [Continuous Yield Capture] ├── Harvest Basis Spread at Expiry └── Collect 8-Hour Funding Payments │ ▼ [Revenue Distributed to Staked/Value-Accruing Stablecoin] ``` #### Staking assets Solana and Ethereum operate on a Proof-of-Stake (PoS) consensus model. In both ecosystems, income is generated with the following: * Consensus layer inflationary rewards * MEV (maximum extractable value) paid to stakers which may include priority fees #### Liquid stablecoin backing rewards Excess stablecoin inventory that is not deployed into derivative/perp strategies accrue fixed rewards and/or amplified rewards using stable looping (yield arbitrage) as the market supports. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://abrafi.gitbook.io/abrafi-docs/solutions/protocol-revenue.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.