# Yield Composition
All yield in Monetrix flows to **sUSDM holders** through the sUSDM/USDM exchange rate. If you hold plain USDM without staking, you do not earn.
The yield itself comes from **four independent on-chain sources**. Each has a different driver, which is why total yield stays positive across market conditions.
## 1. Funding Yield
**What it is:** The fee long speculators pay short holders on perpetual markets.
**How it's captured:** The protocol holds short perps against its spot backing. When funding is positive (longs pay shorts, the default in crypto), the protocol receives the fee continuously.
**Why it's the primary driver:** In bull markets, speculative leverage demand pushes funding rates high, and the protocol sits on the receiving side.
## 2. Spot Lending Yield
**What it is:** Lending interest paid to holders of spot assets on Hyperliquid's native lending layer.
**How it's captured:** Every dollar of spot collateral automatically earns lending yield. This happens in parallel with the collateral's hedging role, thanks to Hyperliquid's Portfolio Margin.
**Why it's the floor:** Lending yield is driven by on-chain borrowing demand, not perp funding rates. It persists even when funding is flat.
## 3. Maker Rebates
**What it is:** Fees paid to liquidity providers on Hyperliquid's orderbook.
**How it's captured:** Initial hedge entries are typically executed as **takers** with market orders so price exposure is neutralized the moment USDC arrives. The maker rebate stream comes from the slower, scheduled flows where the engine can afford to post limit orders and wait - primarily **rebalancing**, **ADL-queue hygiene maintenance**, and **anti-ADL re-opens** (see [Anti-ADL Shield](/risk-and-security/anti-adl-shield.md)). Across a position's lifetime, these maker-side fills accumulate into a meaningful rebate stream.
**Why it's structural:** The rebate comes from trading the protocol has to do anyway as positions are maintained. It's execution efficiency converted into a yield stream.
## 4. Dynamic HLP Yield
**What it is:** Returns from Hyperliquid's HLP vault.
**How it's captured:** When funding rates compress in neutral or bear markets, the protocol dynamically allocates a portion of collateral into HLP.
**Why it matters:** Most delta-neutral protocols break down when funding compresses. The HLP allocation is the cushion that keeps total yield positive in those periods.
## Dominant contributor by market regime
| Market Regime | Dominant Contributor |
| ------------- | ----------------------------- |
| **Bull** | Funding |
| **Neutral** | Lending + Maker Rebates + HLP |
| **Bear** | HLP + Maker Rebates |
The mix shifts with market conditions. Live yield depends on Hyperliquid funding rates, lending demand, trading volume, and protocol allocation.
## How holders receive yield
* Stake USDM to receive sUSDM.
* Hold sUSDM. The sUSDM/USDM exchange rate grows as earnings accrue.
* Unstake (with cooldown) to convert back to USDM at the then-current rate.
No claim transactions. No manual compounding. No reward-token switching.
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