# Yield Mechanics

### Introduction

csUSDL generates yield from three sources: real-world interest (T-Bills), DeFi lending, and token rewards. These yields are either auto-compounded into the token’s price or claimable by users.

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### 1. USDL Yield (T-Bill Rebases)

The base yield comes from USDL — a fully backed, regulated stablecoin issued by Paxos. USDL earns interest from a portfolio of U.S. Treasury bills and cash equivalents.

* Yield is distributed via daily rebases by Paxos.
* wUSDL (wrapped USDL) converts this into an accrual model.
* Since csUSDL holds wUSDL, the daily T-Bill yield from USDL accrues automatically and is reflected in csUSDL’s share price.

> This yield is **auto-compounded** into csUSDL and reflected in the `convertToAssets()` share price.

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### 2. Lending Yield on Morpho

Coinshift deploys deposited wUSDL into Morpho Blue, where borrowers can take loans against overcollateralized assets like wstETH or cbETH.

* csUSDL earns interest paid by borrowers in real time.
* Lending rates are variable and depend on market utilization.
* If utilization is high, lending APR increases.

> This yield is **auto-compounded** and also reflected in csUSDL’s increasing share price.

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### 3. SHIFT Token Rewards

In addition to interest, csUSDL holders earn SHIFT rewards:

* Coinshift’s native governance token
* 5% of total supply reserved for early csUSDL users
* Accrues over time and will be claimable at token launch and per vesting schedule
* Speculative value until trading begins

> These rewards are **not auto-compounded** and must be claimed manually.

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### Yield Breakdown (Example)

| Yield Source        | Compounding | Estimated APR     | Notes                               |
| ------------------- | ----------- | ----------------- | ----------------------------------- |
| USDL (T-Bill yield) | Auto        | \~4.0%            | Rebased daily by Paxos, via wUSDL   |
| Morpho Lending      | Auto        | up to 2%          | Variable, borrower demand-dependent |
| SHIFT Rewards       | Manual      | up to speculation | Accrues pre-launch, claimable later |

> APRs are indicative and fluctuate over time.

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### Summary

* csUSDL grows in value automatically as both T-Bill and lending yields accrue inside the vault.
* Users don’t need to stake, claim, or manage positions — holding csUSDL is enough to earn yield.
* SHIFT tokens are separate, and claimable via external interfaces.