> ## Documentation Index
> Fetch the complete documentation index at: https://docs.arrakis.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Yield-Bearing Assets

> Keep sell-side liquidity in range for yield-accruing assets as their price drifts, so the asset stays convertible at scale and usable as collateral.

A yield-bearing asset (e.g. syrupUSDC, USDAI, etc) is only as useful as its available liquidity. Holders use these tokens as collateral in lending loops, perps, and structured positions, and every one of those use cases depends on converting the asset back to its quote on demand. That requires deep, reliable sell-side liquidity onchain. The problem is that yield accrual works against passive liquidity: as the token appreciates with its yield, a static concentrated position drifts out of range, sell-side depth thins exactly when holders need it, and the asset becomes harder to use as collateral.

Arrakis Pro keeps sell-side liquidity in range as the asset's price drifts. The [**Yield-Bearing Asset Strategy**](/yield-bearing-asset) tracks the asset's exchange rate through its ERC-4626 vault and repositions automatically, holding deep sell-side depth along the yield curve without manual intervention. The team keeps self-custody through the vault NFT.

## Why yield-bearing assets need active liquidity

Two problems are specific to assets that accrue value over time. Each is addressed by active management tuned to the yield curve.

<Card title="Yield accrual pushes passive liquidity out of range.">
  A yield-bearing token appreciates against its quote asset as yield accrues, so the pool price drifts steadily upward and a static concentrated position falls out of range. The LP either widens the range and loses capital efficiency, or rebalances by hand, repeatedly. The Yield-Bearing Asset Strategy reads the asset's exchange rate from its ERC-4626 vault and repositions automatically as the rate drifts.
</Card>

<Card title="Collateral utility depends on reliable exit liquidity.">
  For a yield-bearing asset to function as DeFi collateral, holders have to convert it back to the quote on demand: to repay debt, unwind a loop, or exit during stress. Lending markets list assets on the strength of that exit liquidity, and thin or out-of-range depth limits how far the asset can scale. Inventory is skewed heavily toward the quote asset to prioritize sell-side depth, so the asset stays convertible at scale.
</Card>

## Which assets this fits

The strategy fits any token whose value accrues through yield and is exposed through an ERC-4626 vault. The common categories:

| Asset class               | Typical yield source                      | Liquidity need                                                                      |
| ------------------------- | ----------------------------------------- | ----------------------------------------------------------------------------------- |
| Yield-bearing stablecoins | Interest-bearing reserves, private credit | Deep sell-side depth so the asset converts to its quote with low slippage on demand |
| Liquid staking tokens     | Staking rewards via exchange-rate growth  | In-range depth that tracks the upward drift                                         |
| Tokenized treasuries      | Short-term government debt                | Reliable exit liquidity for an RWA-backed instrument                                |
| Tokenized private credit  | Institutional loan interest               | Sell-side depth for a less liquid underlying                                        |
| Yield tokenization        | Split principal and yield tokens          | Concentrated depth for two thin order books per asset                               |

Tokens that track yield by rebasing (changing balance rather than exchange rate) follow a different mechanism and are not the primary fit.

## How Arrakis fits a yield-bearing asset issuer

The yield-bearing asset itself runs on the [**Yield-Bearing Asset Strategy**](/yield-bearing-asset). Issuers often have a second token to manage as well: a governance or utility token that launches and trades like any other project token. That token uses the standard lifecycle.

```mermaid theme={null}
flowchart LR
    subgraph YB[Yield-bearing asset]
      direction TB
      S1[Yield-Bearing Asset Strategy<br/>Sell-side depth tracks the yield curve]
    end
    subgraph GOV[Governance / utility token]
      direction TB
      S3[Bootstrap then Flagship<br/>Launch and ongoing management]
    end
    Issuer([Yield-bearing<br/>asset issuer]) --> YB
    Issuer --> GOV
```

For the governance token, [**Bootstrap**](/bootstrap) handles the launch and [**Flagship**](/flagship) handles ongoing management. Both tokens sit in self-custodial Arrakis vaults under the issuer's control.

## Supported infrastructure

| Layer           | Supported                                                                                                                                                       |
| --------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Chains          | Ethereum, Base, Arbitrum, Optimism, BNB Chain, Unichain, Ink, Hyperliquid, Solana                                                                               |
| DEXs            | Uniswap v3 and v4, Aerodrome Slipstream, Velodrome Slipstream, PancakeSwap v3 and v4 (Infinity), Hyperliquid, Hadron PropAMM serving Jupiter and Titan (Solana) |
| Asset interface | ERC-4626 vault for the yield-bearing token (required for the strategy's mint and redeem path)                                                                   |

## Integration path

Onboarding requires confirming the ERC-4626 vault interface and configuring the inventory skew for the asset's expected sell-side demand.

<Steps>
  <Step title="Discovery">
    Conversation with the Arrakis team about the asset, its yield mechanism, the ERC-4626 vault, and the target sell-side depth. Arrakis can analyze the asset's current onchain liquidity and simulate the improvement.
  </Step>

  <Step title="Configuration">
    Vault parameters confirmed: pair, inventory skew (up to 99% quote), the ERC-4626 vault used for mint and redeem, exchange-rate deviation guardrails.
  </Step>

  <Step title="Deployment">
    Arrakis deploys the vault on the chosen DEX and chain. The vault NFT transfers to the issuer's multisig.
  </Step>

  <Step title="Active management begins">
    The strategy tracks the exchange rate and repositions automatically. The team can pause, reconfigure, or withdraw at any time.
  </Step>
</Steps>

## FAQ

<AccordionGroup>
  <Accordion title="Our asset earns yield by rebasing, not by an exchange rate. Does this work?">
    The Yield-Bearing Asset Strategy is built around an ERC-4626 exchange rate that drifts upward as yield accrues. Tokens that rebase (where balances change rather than the exchange rate) follow a different mechanism and must be wrapped before they can use the Yield-Bearing Asset Strategy. The Arrakis team can advise on the right setup during discovery.
  </Accordion>

  <Accordion title="Why does it make sense to skew inventory heavily toward the quote asset?">
    Yield-bearing assets are often used as collateral, so the liquidity that matters is sell-side: holders converting the asset back to its quote on demand. Buyers can usually mint the asset directly from its ERC-4626 vault, so the pool does not need deep buy-side inventory. Skewing the inventory toward the quote (up to 99%) puts capital where it is actually used. The [**Yield-Bearing Asset Strategy**](/yield-bearing-asset) page covers this in full.
  </Accordion>

  <Accordion title="Do we have to provide all the quote-side capital ourselves?">
    The issuer provides the quote reserves that back sell-side depth, sized to the target depth for the asset. The inventory skew concentrates capital on the sell side, so more of every dollar contributes to the exit depth that matters. Sizing is set during discovery against the asset's expected exit volume.
  </Accordion>

  <Accordion title="What happens to sell-side depth during a depeg or stress event?">
    The strategy stops repositioning when the pool price diverges far from the vault's exchange rate, so it does not rebalance through a manipulated or stressed price. The position can sit out of range until the gap closes. The [**Yield-Bearing Asset Strategy**](/yield-bearing-asset) page covers the guardrail behavior.
  </Accordion>
</AccordionGroup>