Idle is a protocol building an ecosystem of yield-generating products including yield optimization and risk-tranching strategies.
Idle is a decentralized yield generation protocol currently composed of two core products: Best Yield and Perpetual Yield Tranches (PYT). The Best Yield product is a lending aggregator that actively monitors yield across third-party platforms in order to constantly rebalance capital and earn the highest yield possible. User funds are pooled together in a smart contract (one for each supported asset) in order to minimize gas fees and automatically deposited into an integrated lending partner. Users who deposit funds receive idleTokens in return that represent their underlying assets plus accrued interest. PYT is a product that separates risk into two tranches: senior and junior. The senior tranche offers users built-in coverage that is provided by the junior pool. Each pool consists of yield-bearing tokens with the pool's net asset value (NAV) expected to increase over time. Any decrease in the NAV triggers an emergency shutdown to protect the senior pool. The senior pool has a first lien on the underlying assets, which means they are first to be repaid in case of default from any hacks or loss of funds. The junior tranche has a second lien on the underlying assets (or none in case of fund losses), but receives a higher leveraged yield in return. The junior pool receives a higher share of yield by design as it is compensated (by the senior tranche) for taking on higher risk. PYT leverages an adaptive yield split to calculate the yield between the senior and junior pools. This dynamic yield works such that the senior tranche receives most of the underlying yield when liquidity is low on the junior side or receives a guaranteed minimum portion of the underlying yield when liquidity is high on the junior side. The junior tranche receives a leveraged yield no matter when the amount of deposited liquidity is for the senior side.
Idle charges a 10% performance fee on its Best Yield strategies that are earned every time a user withdraws funds from a strategy. All accrued fees are distributed to the FeeTreasury contract which is governed by IDLE holders. For PYT strategies, the platform charges a 10-15% performance fee that is deducted every time a PYT auto-compounds accrued rewards. All accrued fees are currently distributed to the protocol treasury, which is governed by a team multisig.
You earn yield by depositing your assets into either the Best Yield or PYT strategies. You can also stake IDLE (stkIDLE) to have access to buybacks distribution and boosted yield.