How Is The Yield Generated?

Robin’s yield mechanism is a core innovation that transforms passive prediction market capital into an actively productive financial instrument. Instead of leaving staked funds idle until market resolution, Robin redirects them into trusted DeFi protocols to earn yield throughout the lifecycle of each market.

Step-by-Step Yield Flow

1. Liquidity Providers Mint Conditional Tokens

• LPs initiate the market by depositing stablecoins (e.g., USDC) into Robin’s Minting Contract.

• In exchange, they receive an equal amount of YES and NO tokens (representing the two outcomes of the event).

• These tokens are typically seeded into an AMM (automated market maker) pool to provide baseline liquidity for traders.

At this point, Robin has both:

• Outcome tokens circulating

• A pool of stablecoins available to generate yield

2. Capital Is Deposited Into Yield Vaults

• The stablecoins collected from LP minting are routed into Robin’s Yield Strategy Contract, which deposits them into external DeFi protocols such as:

  • Aave or Compound (for lending-based yield)

  • Ethena (for delta-neutral or synthetic yield mechanisms)

  • Other non-disclosed market neutral strategies

• These funds accumulate yield continuously over the duration of the prediction market.

Robin’s vault architecture is permissionless and transparent, allowing LPs and users to monitor yield accrual in real-time.

3. Trading Activity Does Not Dilute Yield

• When traders purchase YES or NO tokens, they’re typically buying from existing LP liquidity or swapping one outcome token for another.

• New stablecoins are only added to the vault when fresh tokens are minted (i.e., when new liquidity is introduced).

This distinction ensures that only liquidity provision generates base yield, while trading generates fees and reward entitlements instead. Traders are however compensated based on the volume they generate.

At Market Resolution

Once a market reaches its resolution timestamp and a trusted oracle confirms the outcome:

1. Funds Are Withdrawn from the Yield Protocols

• Robin triggers a call to withdraw all principal + accumulated yield from the integrated DeFi strategies.

• This capital is returned to the Robin protocol for redistribution.

2. Yield Distribution

Robin implements a dual-beneficiary model for yield sharing:

Participant	Yield Share	Notes
Liquidity Providers	~75–90%	LPs earn the majority of the yield in exchange for taking capital risk and enabling the market to function.
Traders	~10–25%	Traders earn a portion of the yield proportional to the volume they generate, incentivizing market activity and participation.

Why This Matters

Traditional prediction markets have poor capital efficiency: funds are locked and do nothing while waiting for an outcome. Robin flips that model by:

• Unlocking DeFi-native returns during the market’s lifespan

• Creating dual incentives for both LPs and high-volume traders

• Increasing expected value for all participants — even before an event resolves

This approach helps Robin bootstrap deeper liquidity and more active markets, making the system more attractive for both speculators and passive capital providers.