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Protocol Revenue Explanation

Stabolut generates revenue primarily from the spread and funding rates.

1. Funding Rate Revenue​

When the protocol shorts an asset (e.g., ETH) to hedge collateral, it pays or receives funding.

  • Positive Funding: Longs pay Shorts. Stabolut receives payments.
  • Negative Funding: Shorts pay Longs. Stabolut pays.

Historically, crypto funding rates are positive >80% of the time due to structural long demand.

2. Staking Yield (LSTs)​

If the collateral used is a Liquid Staking Token (e.g., stETH), the protocol earns the native staking yield (~3-4% APY) in addition to any funding revenue.

3. Mint/Redeem Fees​

Small fees (e.g., 0.1%) may be charged on minting and redeeming to cover operational costs and contribute to the Insurance Fund.