# FAQ

### **Frequently Asked Questions**

**What is USD+ and how does it work?** USD+ is the primary token of the Overnight protocol, fully collateralized with assets that can be instantly converted into USDC. It is a rebase token that can experience Profit (positive rebase) when the collateral value exceeds 100% and Loss (negative rebase) when it falls below that threshold. Profits are distributed to USD+ holders by increasing their wallet balance once daily.

**What is rebase and how does it work?** The rebase mechanism is triggered manually by the protocol and occurs seamlessly in six steps:

1. Users mint USD+ using USDC or BUSD through Overnight’s dApp (BUSD is only for minting USD+ on BSC).
2. Smart Contracts implement an automated investment strategy for yield-generating purposes.
3. Fees and rewards from the investment strategy (including inflationary rewards, swap fees, and lending fees) are swapped for USDC.
4. New USD+ is minted from the earned USDC.
5. The minted USD+ is sent back to the user's wallet through the rebase mechanism.

The rebase mechanism pays out yields from strategies, expanding the circulating supply financed by the USDC earned from yield-farming strategies. This approach is similar to Interest Bearing Tokens, like aUSDC from AAVE, where underlying token quantities grow passively based on lending fees earned. The formula for determining a user's rebase rewards is:

**Rebase Rewards = (User Holdings \* Rebase Amount) / Total Holdings**

**What is the OVN token?** The OVN token is a utility token with several purposes in the Overnight protocol. It is used for:

* **Bribes**: Promoting USD+ and incentivizing conservative risk strategies.
* **Voting Rights**: Participating in decentralized risk monitoring and management.

The goals of issuing OVN are to:

1. Promote and popularize USD+ through bribes.
2. Establish robust and decentralized risk management processes at the protocol level.

**What are bribes?** Bribes are a mechanism that allows users to select a Liquidity Provider (LP) to incentivize on a compatible DEX. The more votes an LP receives, the more rewards LP holders earn. In return, voters receive a portion of the LP fees and the bribes.