Yield

Maturity Mismatch

Verio utilizes a maturity mismatch concept to generate higher returns. Using banks as an example, a portion of users’ liquid deposits are redirected into longer-term investments for higher yield. Verio will stake a portion of IP with longer delegation durations to earn higher yield for our vIP holders, without sacrificing short term access to liquidity when users want to redeem. As a simple example let's say Verio maintains the following distribution:

• a reserve of 50% IP stake directed towards the Flexible time frame (flexible yield 4%).

• a reserve of 25% IP stake directed towards the Medium time frame (mid yield 6%).

• a reserve of 25% IP stake directed towards the Long time frame (high yield 8%).

Imagine a user wants to earn a high yield but also doesn't want to have liquidity locked up for more than 14 days. In order to keep liquidity highly available (i.e. 14 days), the user can only choose the Flexible stake period with validators. This yields only 4%. However, in Verio's model, we will offer a higher yield by directing a portion of the aggregated users' stake toward longer periods.

$$0.50 * 0.04 + 0.25 * 0.06 + 0.25 * 0.08 = 0.055$$

As shown above, the effective reward ratio of 5.5% is significantly higher (1.375x) than the standard 4.00%. More importantly, users still retain the ability to unstake, while only incurring the 14 day unbonding period associated with the Flexible duration. Furthermore, unlike staking directly with the validator where IP tokens are locked up, users can swap from the liquid staking derivative to the native IP token through dexes anytime to exit their position.

Long Term Distribution

In reality, 50% liquid reserves would be an extremely cautious position (10x of a bank). Fortunately, delegations that have already matured continue to earn their yield multiplier even though unstaking them past maturity only incurs the standard unbonding period. Thus, we should expect Verio to overwhelmingly outperform staking with validators directly, as Verio will gradually increase the percentage of stake directed towards longer periods. Since an increasing number of these delegations will reach maturity, the effective portion of liquid reserve can be maintained even with a distribution favoring longer durations. This means even higher yield in the long term, without sacrificing fast access to liquidity for our users.