Yield sources and risk profile

DUO Restaked Tokens Yield Sources

The yield generated by DUO’s restaked tokens (DRST) currently comes from three primary sources:

1. Base Staking Rewards

Derived from securing the Ethereum network through transaction validation via liquid staking (e.g., ETH → wstETH via Lido Finance).

These rewards form the foundational yield layer for all DRST tokens.

2. Restaking Yield

Generated by deploying part of DRST liquidity into Aurex for:

• Collateralized lending to traders

• Leveraged liquidity provision (LP) trading

This additional yield layer is carefully managed to maintain instant liquidity for DRST redemptions.

3. Mint/Redeem Fee Share

DRST token holders receive a portion of mint and redeem fees collected by the protocol.

These fees are distributed according to the allocation model described in Section 2.3, providing a consistent supplemental income stream.

Yield Strategy Philosophy

DUO’s initial focus is to build the most viable and sustainable restaking products possible:

• Priority is given to healthy, secure, and highly compatible yield sources that can be layered together without increasing the user’s base asset risk.

• The objective is to deliver the full yield potential that a staking position can generate, without introducing unnecessary exposure.

Risk Profile

• Base Asset Peg: In standard form, DRST tokens cannot lose value relative to their underlying asset (e.g., DRST-ETH vs. ETH, DRST-0FX vs. 0FX), except in the event of a major protocol exploit or technical failure.

• Exchange Rate Growth: If DRST-ETH trades at 1.05 ETH, it means 0.05 ETH per DRST-ETH has been earned in real rewards. This premium will persist unless additional rewards are accrued, in which case the premium increases further.

• Market Movements: DRST token prices move in direct correlation to their base asset’s market price. The premium over the base asset is purely a function of accumulated rewards, not market speculation.

Future Variants

While the current DRST offerings prioritize stable, low-risk profiles, DUO may explore alternative vault structures with varying exposure and risk levels to cater to more aggressive yield strategies in the future.