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:
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
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