Yield Engine

Midgard does not use a flat APR.

Factory inflation is built from:

• base factory burn
• an optional bonus rate
• a linear ramp from a starting bonus to an ending bonus

Basis points

Yield rates are stored in basis points.

• 1 bp = 0.01%
• 100 bp = 1%
• 200 bp = 2%
• 350 bp = 3.5%

So when admin shows min_bonus_bp = 300, that means the factory starts at a 3% bonus rate.

Two yield layers

Midgard has two yield layers:

1. Global yield config. The protocol stores one current YieldConfig with:
   • min_bonus_bp
   • max_bonus_bp
   • ramp_duration
2. Per-factory snapshot. Every factory copies those 3 values when it is created.

That snapshot is the important part:

• admin shows the current global config
• a factory page shows that factory’s own snapshot
• changing global yield later does not rewrite older factories

What each field means

• min_bonus_bp: the bonus rate at activation
• max_bonus_bp: the bonus rate after the ramp finishes
• ramp_duration: how many seconds it takes to move from min to max

Example:

• min_bonus_bp = 300
• max_bonus_bp = 600
• ramp_duration = 604800

This means:

• the factory starts at 3%
• ramps linearly over 7 days
• ends at 6%

When the ramp starts

The ramp starts when the factory is activated, not when it is merely created.

That matters because a pending factory has not started its burn / inflation clock yet.

Spot rate vs earned bonus

There are two related ideas:

1. Current bonus rate: the spot rate right now
2. Bonus inflation earned so far: the bonus already accumulated over the whole life of the factory

The current spot rate is simple:

• before the ramp ends, it moves linearly from min to max
• after the ramp ends, it stays at max

In shorthand:

• if t = 0, current rate = min
• if 0 < t < ramp, current rate = linear interpolation between min and max
• if t >= ramp, current rate = max

But Midgard does not apply the current spot rate to all past burn.

Instead, it integrates the bonus over time using the average bonus over elapsed burn.

That means:

• a factory halfway through the ramp has a lower earned bonus than current rate x all burn
• long-lived factories benefit more because more burn happens at the higher end of the ramp

Factory-side inflation math

At the factory level, the inflation side is:

• initial_burn
• plus base burn accumulated over time
• plus bonus inflation from the yield config

The important design detail is that initial_burn is both:

• a burn obligation
• and an initial inflation credit

So initial_burn is not just a fee. It is part of the factory accounting model.

Adaptive yield logic

The permissionless adjust_yield() path updates the global config for future factories.

It compares:

• current total GARD supply
• against either a fixed target supply or a scheduled target supply

The current logic has no hard floor.

The shape is:

• if no target is configured: min = 0, max = 0
• if current supply is at or above target: min = 0, max = 0
• if current supply is below target:
  • compute the supply deficit in basis points
  • set min_bonus_bp = deficit_bp, capped by max_bonus_cap_bp
  • set max_bonus_bp = min(deficit_bp * 2, max_bonus_cap_bp)
  • set ramp_duration = 7 days

So the controller can reduce new-factory bonus all the way to 0%.

Supply accounting note

Two different things are happening in the system:

• Challenge ticket burns are real token burns.
• Factory daily burn is internal factory accounting against stake.

That means the adaptive controller is a soft supply-shaping tool, not a perfect fixed-supply clamp. It modulates bonus inflation for new factories, while real challenge flow still adds the unpredictable burn side.

Quick examples

If the target is configured and the cap is high enough:

• exactly on target: 0% -> 0%
• 1% below target: 1% -> 2%
• 3% below target: 3% -> 6%
• 8% below target with a 5% cap: 5% -> 5%

That last case matters:

• the min rate hits the cap
• the end rate also hits the cap
• so the factory becomes a flat-rate factory instead of a ramping one

Manual override

The runtime admin can also set the global yield config directly.

That means the protocol can run either:

• the automatic supply-based adjustment flow
• or a manual config such as:
  • flat 3%
  • 2% -> 5% over 7 days
  • 0% -> 0% for net-zero bonus

What new factories inherit

When you create a factory, it snapshots whatever the global config is at that moment.

So:

• the create-factory modal shows what a new factory will inherit
• the admin page shows the current global config
• each live factory shows its own initial / current / end bonus values from its snapshot

Related creation rule

Yield is separate from the factory’s initial challenge reserve, but the two are often confused.

When a factory is created, the contract also enforces a minimum initial_burn so the factory is immediately challengeable at T0.

That minimum is:

• ticket cost = 10% of daily burn
• challenge reward = 190% of ticket cost
• so minimum initial_burn = 19% of daily burn

Leverage applies the same idea again: if leverage increases daily burn, the contract increases initial_burn when needed so the leveraged factory still supports one challenge reward immediately.