> For the complete documentation index, see [llms.txt](https://whitepaper.lendr.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://whitepaper.lendr.fi/how-it-works/where-the-yield-comes-from.md).

# Where the Yield Comes From

LsRWA Tokens give you **100 % price exposure** to the underlying asset **plus** **additional APY** (i.e. 2-5% APY).\
That additional return is generated by multiple “overlay” strategies that run in the background at our regulated custodian/broker, always hedged so your net market exposure stays unchanged.

Some of these strategies include futures basis, insured lending, covered-call overwrites, etc. as well as novel on-chain strategies with web3 protocols and safe assets such as stablecoins or US treasury back tokens. 

### Yield Flow

1. **Daily P\&L report** — Custodian calculates net profit / loss across all overlays and assets.
2. **Vault Update** — Ops posts the figure on‑chain; vault/LsRWA token share‑price moves accordingly.
3. **Performance fee** — 20 % of positive P\&L is sent to the FeeRouter; 80 % is sent in the staking vault. A majority of this fee is sent to RWAL stakers.
4. **Auto‑compounding** — Your LsRWA Token price rises; no action required to realize gains.

## Risk Management

Max drawdowns, low leverage, independent oversight, and working directly with risk management companies are just some of the ways Lendr ensures strategy risk is robustly managed.