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:
Users mint USD+ using USDC or BUSD through Overnight’s dApp (BUSD is only for minting USD+ on BSC).
Smart Contracts implement an automated investment strategy for yield-generating purposes.
Fees and rewards from the investment strategy (including inflationary rewards, swap fees, and lending fees) are swapped for USDC.
New USD+ is minted from the earned USDC.
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:
Promote and popularize USD+ through bribes.
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.
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