Yield Sources

Where profits come from in Pupas Protocol's AI-powered lending and staking system

Understanding yield sources helps you evaluate the sustainability and potential of returns. Pupas Protocol generates profits through DeFi lending, staking, and yield farming activities on Waves blockchain, not token inflation or unsustainable mechanisms.

Primary Yield Sources

1. Lending Protocol Optimization

Smart Contract Lending

AI agents identify and invest in the highest-yield lending protocols on Waves blockchain:

Protocol A: USDT Lending = 8.5% APY
Protocol B: USDT Lending = 12.2% APY
Protocol C: USDT Lending = 9.8% APY
AI Selection: Protocol B (highest risk-adjusted return)

Execution Process

  1. Protocol Analysis: AI evaluates lending protocol safety and yields

  2. Risk Assessment: Smart contract audits and TVL analysis

  3. Allocation: Distribute funds to optimal protocols

  4. Monitoring: Continuous performance and security tracking

Revenue Characteristics

  • Yield Range: 6-15% APY depending on market conditions

  • Risk Level: Low-Medium (smart contract risk)

  • Liquidity: High (most protocols allow instant withdrawal)

  • Scalability: Increases with total value locked

2. Staking Strategy Optimization

Validator Selection and Delegation

Optimizing staking returns through intelligent validator selection:

Staking Targets

  • Waves Native Staking: 4-6% APY through leasing

  • Governance Token Staking: 8-15% APY in protocol tokens

  • Liquid Staking Derivatives: 6-10% APY with liquidity

Optimization Features

  • Validator Analysis: Performance, uptime, and commission evaluation

  • Delegation Distribution: Spread across multiple validators

  • Reward Compounding: Automatic reinvestment of staking rewards

  • Slashing Protection: Diversification to minimize risk

3. DeFi Yield Farming Intelligence

Liquidity Mining Optimization

Providing liquidity to DeFi protocols for token rewards and trading fees:

Protocol Rewards Analysis

Protocol
Asset Pair
Base APY
Token Rewards
Total APY

Puzzle Swap

USDT/WAVES

3.2%

8.5%

11.7%

WX Network

USDT/USDC

2.8%

6.2%

9.0%

Waves DEX

USDT/NSBT

4.1%

7.3%

11.4%

AI Selection

Best Risk/Return

10-12%

AI Optimizations

  • Impermanent Loss Modeling: Predict and minimize IL exposure

  • Reward Token Management: Optimal timing for claiming and selling

  • Pair Selection: Choose stable, high-volume pairs

  • Exit Strategy: Automated withdrawal when yields decline

Revenue Distribution

Profit Allocation Model

From Gross Yields to User Returns

Fee Transparency

  • Protocol Fee: 0.3% of stake amount (sent to treasury at staking)

  • No Performance Fee: No additional fees on returns

  • No Withdrawal Fee: Exit anytime without penalties

  • Network Fees: Standard blockchain transaction costs

Historical Yield Breakdown

Last 90 Days Performance

Yield Source
Contribution
APY Impact
Risk Level

Lending Optimization

40%

4.8%

Low-Medium

Staking Strategies

30%

3.6%

Low

Yield Farming

25%

3.0%

Medium

Total Portfolio

100%

12.0%

Low-Medium

Yield Sustainability

DeFi-Native Returns

Why Yields Are Sustainable

Pupas yields come from fundamental DeFi activities:

  1. Lending Demand: Constant need for borrowing in DeFi

  2. Staking Rewards: Blockchain security incentives

  3. Protocol Incentives: Token rewards for liquidity provision

  4. AI Efficiency: Machine learning optimizes allocation over time

Comparison with Other Models

Model Type
Yield Source
Sustainability
Risk Level

Token Inflation

New token minting

Low (dilution)

Medium

Ponzi Schemes

New user deposits

None (collapse)

Extreme

Fixed Savings

Bank deposits

High (regulated)

Very Low

AI DeFi

Protocol yields

High (market-based)

Low-Medium

Market Conditions Impact

Bull Market Performance

Favorable Conditions

  • Higher DeFi Activity: More lending demand and higher yields

  • New Protocol Launches: Additional yield opportunities

  • Increased Staking: More validators and higher rewards

  • Token Incentives: Protocols offer higher rewards to attract liquidity

Expected Returns: 10-14% APY

Bear Market Performance

Challenging Conditions

  • Reduced DeFi Activity: Lower lending demand

  • Protocol Consolidation: Some protocols may shut down

  • Lower Token Rewards: Reduced incentive programs

  • Increased Risk Aversion: Focus on safer, lower-yield protocols

Expected Returns: 8-12% APY

Neutral Market Performance

Stable Conditions

  • Consistent Lending: Steady borrowing demand

  • Mature Protocols: Established, reliable yield sources

  • Balanced Risk/Return: Optimal allocation across strategies

  • Predictable Returns: More stable yield generation

Expected Returns: 10-14% APY

Protocol-Specific Analysis

Waves Ecosystem Opportunities

Native Lending Platforms

  • Waves lending protocols: Direct USDT/USDTu lending

  • Puzzle Swap: AMM-based yield farming

  • WX Network: Cross-chain DeFi bridge yields

Advantages of Waves Focus

  • Low Fees: Minimal transaction costs

  • Fast Settlement: Quick rebalancing between protocols

  • Native Integration: Direct USDTu support

  • Ecosystem Growth: Expanding DeFi opportunities

Future Expansion Plans

Multi-Chain Strategy (Roadmap)

  • Ethereum: Access to largest DeFi ecosystem

  • Polygon: Low-cost DeFi alternatives

  • Avalanche: High-performance DeFi protocols

  • Arbitrum: Layer 2 scaling solutions

Learn More

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