Calculation Example

Reward distribution mechanism allows both stUSR and RLP benefit from collateral pool income. Losses are attributed to RLP.

For the calculation example, suppose $100,000 were deposited into the protocol, with $70,000 into USR and $30,000 into RLP.

Example 1. Reward epoch profit

Over the course of a reward epoch, collateral pool realizes $20,000 profit. In this example, both stUSR and RLP share a portion of increase in TVL.

• Base Reward is calculated as $20,000*70%=$14,000 and allocated to stUSR and RLP proportionately to their TVL;

• Risk Premium is calculated as $20,000*30%=$6,000 and allocated to RLP.

The table below shows calculation of how the profit is attributed.

	Amount	stUSR Portion	RLP Portion
Total	$20,000	$5,600	$14,400
Base Reward	$20,000*70%=$14,000	$5,600	$8,400
Risk Premium	$20,000*30%=$6,000	$0	$6,000

Example 1 (Reward epoch profit) illustration

Example 2. Reward epoch loss

Over the course of a reward epoch, collateral pool realizes $20,000 loss. In this example:

• Full amount of loss is allocated to RLP. Its value decreased by $20,000;

• No distributions are made to stUSR.

Example 2 (Reward epoch loss) illustration