Yield Forwarding

Yield Forwarding is a feature that applies to all of Origin's yield-bearing tokens (OUSD, OETH, Super OETH, OS). With Yield Forwarding, protocols can route the yield from Origin’s rebasing tokens to approved smart contracts.

By default, Origin’s yield-bearing tokens held in smart contracts do not rebase. With Yield Forwarding, we can submit proposals to direct yield from OS, OETH, Super OETH, and OUSD held in smart contracts to approved addresses. By doing so, yield earned on these tokens can be used for various purposes, offering a new source of incentives.

How it Works

Yield Forwarding gives OGN governance the ability to forward yield during a rebase from a source address to a target address. Once enabled, yield earned from tokens held in the source address are sent the target address.

Yield forwarding represents a one-to-one relationship between the source and target address. This means that a source address is unable to forward yield to more than one address and a target address is unable to receive forwarded yield from more than one source. See an illustration below.

Pool Booster

One of the first use cases for Yield Forwarding is Pool Booster. Pool Booster uses yield from OTokens to fund incentives on AMM pools. Typically, protocols pair their token with WETH, S, or stablecoins in liquidity pools, but these funds largely sit idle.

Protocols can increase the capital efficiency of its liquidity pools by pairing with Origin's yield-bearing tokens (OUSD, OETH, Super OETH, OS) and enabling Yield Forwarding. Yield generated by Origin’s rebasing tokens in these pools can be used to automatically incentivize the pools. This increases pool APYs and deepens liquidity for their token pair, attracting more LPs to the pool.

Borrow Booster

Borrow Booster applies the same principle to lending markets. Borrow Booster directs yield from Origin’s yield-bearing tokens to incentivize borrowing rates on lending markets. This lowers the APR paid by borrowers, resulting in a lending market with an automated and sustainable incentive system for borrowers.

Take the superOETHb/USDC market on Morpho, for example:

In this market, Super OETH yield is forwarded to Merkl and used to incentivize the borrow rate of USDC. For borrowers, this means lower effective APRs and more efficient leverage opportunities. For lenders, it translates into stronger demand for credit and healthier utilization of capital.

Other Use Cases

Note that Yield Forwarding has many other potential applications including funding a protocol’s treasury, funding staking rewards, DCA'ing into tokens, and beyond. Protocols can earn substantial yield on their ETH and stablecoin holdings by implementing Yield Forwarding, allowing them to extend their runway and fund future initiatives.