Real USD’s yield is derived from the rental income on these Property TNFTs and in certain circumstances the price appreciation of underlying treasury assets (see section: Minting on Gains.)
At launch, without incentives, Real USD will yield ~4.25%. On average, Tangible properties yield 8.5%+ but while the market cap of USDR is small, a large portion of the treasury needs to be kept in DAI to meet the needs of sudden redemptions. Using duress redemption modeling, this portion can reduce over time as the market cap grows.
We think 4.5% is too low of a yield to gain quick traction, even considering the current state of the market. For this reason, we will be subsidizing the yield until Real USD reaches a market cap between $500m and $1bn.
Yield subsidies will be funded using Tangible Labs’ TNGBL tokens that will be converted into USDR. Prior, locked TNGBL positions held in the DAO’s treasury and Tangible labs wallet were burned and re-minted as unlocked TNGBL. These unlocked tokens are being used to fund the incentive program and the affiliate program. The unlocked token number should be sufficient for incentives to run until USDR reaches a $1bn+ market cap dependent on the market price of TNGBL during this period. These tokens won’t be entering circulation; they will simply be used to mint USDR and subsequently will end up in the Real USD treasury.
The TNGBL token has its own value accrual and utility independent of Real USD, making it sound backing for the stablecoin. FRAX has proven that backing a stablecoin with up to 15% in a native token works well even in extreme market conditions.
As we progress through our launch phase, the percentage of treasury assets held in Property TNFTs will consistently increase, allowing the incentives to slowly tail off. Eventually, the incentives will be fully replaced by an increase in collected rental revenue as the real estate portion of the backing expands vs DAI. Gains to TNGBL and property values in the treasury will be converted into new property assets, accelerating the process to increase yield over time.