Capital Flow
This document outlines the flow of capital through the Noderr Protocol, from the moment a user deposits funds to the point where yield is generated and distributed. A clear understanding of this process is essential for comprehending the protocol's value proposition and its underlying economic model.
The Capital Flow Process
The flow of capital within the Noderr Protocol can be conceptualized as a six-stage process:
Deposit: A user initiates the process by depositing capital (e.g., USDC) into a selected Noderr yield vault. This action mints vault tokens for the user, representing their share of the vault's assets.
Allocation: The vault's smart contract then allocates the deposited capital to the Autonomous Trading Engine (ATE), the protocol's core yield-generating component.
Execution: The ATE, which is powered by a decentralized network of Oracle nodes, executes a variety of market-neutral trading strategies across a range of integrated DeFi protocols.
Yield Generation: The successful execution of these strategies generates yield, which is then returned to the ATE. This yield is the primary source of value creation within the protocol.
Distribution: The ATE distributes the generated yield back to the vaults, which in turn increases the value of the vault tokens held by the users. This process is continuous and automated.
Protocol Fees: A small percentage of the generated yield is collected as a protocol fee. These fees are used to reward NODR stakers and node operators, creating a sustainable economic model that aligns the incentives of all protocol participants.
This circular flow of capital ensures that the protocol is self-sustaining and that all participants are rewarded for their contributions. For a more detailed, high-level overview of this process, please refer to the How Noderr Works guide.