yzPP Reward Mechanism (Risk Premiums)

• yzPP’s APY is composed of two components: i) a base yield equivalent to that of syzUSD, ii) and an additional yield budget allocated by the protocol specifically for yzPP.

• The budget for yzPP's additional yield is set daily by the protocol (see below on Risk Premiums).

• yzPP yield is estimated to be >200% that of syzUSD yield based on a 110% collateral ratio.

Risks Premiums

As part of our commitment to sustainable protocol growth and structural integrity, Yuzu Money is formalizing the risk-reward framework for yzPP, this is to ensure that yzPP depositors—who act as the protocol's first loss backstop are consistently and fairly compensated for the capital risk they assume in protecting the broader yzUSD ecosystem.

The protocol has decided to fix risk premiums that redirects yield surplus to yzPP at 15%. To put simply, this 15% risk premium is a additional factor applied on the base yield equivalent that is currently being paid out to syzUSD token holders. The formula for tabulating estimated yzPP yield is as shown below:

$$yzPP \ yield\ (APY) = \frac{syzUSD\ yield * (1 + Risk\ Premiums)} { yzPP\ tvl}$$