Real Yield from Cross-Chain Bridge Reward Pools
The Cross-Chain Bridge distributes 70% of the bridging fees to Reward Pools participants. In this way, BRIDGE holders can obtain Real Yield (in contrast to unsustainable yield farming practices commonly used by DeFi protocols). This does not come from the emission of tokens, but from the revenue of the protocol itself. Find out more about Real Yield and Cross-Chain Bridge Reward Pools below.
What is Real Yield in DeFi?
“Real Yield” refers to the yield obtained through actual revenue from a DeFi protocol, this revenue can be from trading fees collected or, in the case of the Cross-Chain Bridge, through collected bridging fees. Users can obtain part of the protocol’s revenue by staking or locking up the protocol’s governance token in a pool for a period of time.
The concept of Real Yield in DeFi emerged after an era of yields that were unsustainable for DeFi protocols in the long term. Some offered 4-digit annual rates to attract liquidity, but eventually diluted the supply of the protocol’s governance token, affecting the price of the token negatively when demand did not offset the emission of tokens. This model relied heavily on sentiment and demand for the token to maintain a rising token price. Given this situation, investors are looking for DeFi protocols such as the Cross-Chain Bridge to get “Real Yield” based on protocol’s own revenue, instead of unsustainable token inflation.
How the Cross-Chain Bridge offers Real Yield
The Cross-Chain Bridge provides all BRIDGE holders with the ability to earn 70% of the collected bridging fees through its Reward Pools. They are a type of liquidity pool, where participants must stake BRIDGE in the Reward Pool of a token such as USDT, with which the user will then be rewarded. In this way, the Cross-Chain Bridge can distribute a share of its revenue by offering Real Yield to all users participating in the Reward Pools.
By design, 70% of the collected bridging fees are distributed through the Reward Pools, users receive these depending on their share of the pool by staking BRIDGE tokens. The rewards are calculated based on the collected fees for bridging (this depends on the bridging volume of the specific token) and the user’s share of the pool (that depends on the user’s amount of BRIDGE staked).
How do the Cross-Chain Bridge Reward Pools work?
Tokens listed on the Cross-Chain Bridge generate a Reward Pool. Users can then stake their BRIDGE tokens in any of the Reward Pools and get rewarded in the token of their choice. User’s can decide what they want to do with the rewards earned, at their own risk.
Let’s say a user decides to stake 10,000 BRIDGE tokens worth $100 in the USDT Reward pool on the Ethereum Network. There are 100,000 BRIDGE tokens staked in the USDT reward pool, meaning the user has a 10% of the pool and will get rewarded in USDT when USDT is bridged to the Ethereum Network. Another user decides to bridge 100,000 USDT from BNB Smart Chain (BSC) to Ethereum, the current bridging fee for stablecoins is 0.15%, meaning 150 USDT in this case. 70% of the bridging fee goes to the USDT Reward Pool, i.e., 105 USDT will be then distributed among the USDT Reward Pool participants. In this case, the user owns 10% of the pool and will therefore receive 10.5 USDT as reward for this single bridging.
In this way, the Cross-Chain Bridge offers Real Yield opportunities to its users and focuses on building a strong BRIDGE community. Read more about the Reward Pools in our documentation, and do not forget to join our Discord Server!