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Pool Cover Returns
These rewards are subject to change.
Pool Cover will receive one-tenth of the interest yield in a Pool plus MPL rewards.
The APY from MPL rewards will vary depending on 1) the volume of MPL provided; and 2) the MPL price.
The MPL Rewards implementation will be a single deposit of a fixed number of MPL to the Rewards Contract at the start of each month.
This will be determined based on:
  • Average MPL price over preceding 7 days
  • Target Cover Volume in the protocol for the next month
  • Target all in APY that month and average interest rate on loans in the pool
Target Cover Volume size
The Cover Reserve provides additional collateral protection in case of defaults on undercollateralized loans in a Lending Pool. The target reserve size is around 8-12% of the balance of loans in a pool. The MPL rewards would be sized to hit the target all-in APY if actual cover volume meets the target reserve size. E.g. if a Pool has $100M of loans, then $8M-$12M cover reserve.
Target all-in APY
The target all in APY is calculated as this USDC fee plus MPL rewards. Current market conditions for stablecoin farming are generally 15-20% APY. The Cover Reserve receives 0.1x the interest yield in the Pool as fees.
  • If the average interest rate on loans in the pool is 10%, then 1% (i.e. 0.1*10%) goes to the reserve as fees.
  • If the Cover Reserve is 10% of the loans outstanding, then USDC fee APY is 10% (i.e. 1% / 10%).
  • Thus to achieve the target all-in APY of 15-20%, the target MPL rewards would be 5%-10% and the number of MPL deposited at the start of the month would be set accordingly.
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