Staking CHI and LST Yield

stCHI: Governance Token with LST Yield

CHI, the governance token of the Chi Protocol, derives its value from the increasing demand for USC, facilitated by buyback mechanisms and yield generation from LSTs. When users stake CHI, they access the yield from LST reserves that back USC. Therefore, CHI stakers not only potentially profit from price appreciation but also benefit from the growing USC market capitalisation. This expansion results from LST deposits, which increase the USC supply and subsequently yield more stETH to CHI stakers.

CHI Staking APR Calculation

The CHI Staking Annual Percentage Rate (APR) is calculated using a formula that includes factors such as LST rewards to CHI stakers and the total CHI staked. Effective CHI Staking APR vs LSTs

• Assuming the value of the stCHI is lower than the LST reserves and 100% of the LST yield is directed to CHI stakers

  • LSTs in reserves: $2,000,000

  • Value of stCHI : $100,000

  • Alice stakes $20,000 CHI, Bob stakes $30,000 CHI, and Cathy stakes $50,000 CHI

Effective stCHI APR > LST APR:

Definition	Alice	Bob	Cathy
stCHI	$20,000	$30,000	$50,000
Share	20%	30%	50%
Total stCHI		$100,000
LST APR		4%
ETH Staking Rewards (LST APR * Reserves)		$80,000
stCHI APR (ETH Staking Rewards / Total stCHI)		8%
Rewards per Staker	20% * $80,000 = $16,000	30% * $80,000 = $24,000	50% * $80,000 = $40,000

*Note that when value of stCHI > LST reserves, Effective stCHI APR < LST APR