> ## Documentation Index
> Fetch the complete documentation index at: https://docs.makx.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Yield Mechanics

> How interest accrues on bonded ETH and flows back to METH holders in the Makx Yield Vault.

## Interest accrual

MakxYieldPad accrues interest continuously on all outstanding bonded ETH using a per-second interest rate:

```
pending = elapsed × interestRatePerSecond × totalBondedETH / 1e18
```

* `elapsed` — seconds since the last interest collection.
* `interestRatePerSecond` — WAD-denominated rate set by the protocol owner (1e18 = 100% per second; typical values are far smaller).
* `totalBondedETH` — total ETH currently lent out across all active launches.

This calculation is purely accounting — it does not require any per-block transactions. The `lastInterestTimestamp` is updated whenever `collectInterest()` is called.

***

## Interest collection

Anyone can call `collectInterest()` on MakxYieldPad to push accrued interest to the vault:

```solidity theme={null}
yieldPad.collectInterest()
```

The vault also calls this automatically before every deposit and redemption — ensuring share price is always current before any shares are minted or burned.

When interest arrives at the vault:

* `address(vault).balance` increases (idle ETH goes up)
* `totalBondedETH` stays the same
* `totalAssets = balance + totalBondedETH` increases
* `sharePrice = totalAssets / totalSupply` increases
* Every METH holder's position appreciates

***

## Interest vs. rental fees

These are the same economic flow, viewed from different sides:

| Perspective     | Term            | Recipient                      |
| --------------- | --------------- | ------------------------------ |
| Token creator   | Rental payment  | Protocol / vault               |
| Vault depositor | Interest income | METH holders (via share price) |

When a creator calls `depositRent(launchId)`, the ETH flows to the protocol. YieldPad accrues that obligation as `accruedInterest` and pays it into the vault via `collectInterest()`. The vault's idle balance grows, raising the share price.

***

## What drives yield

Yield for METH holders depends on:

1. **Volume of active launches** — More tokens launched = more ETH bonded = more interest accruing.
2. **Bond sizes** — Larger market cap launches rent more ETH, contributing more to `totalBondedETH`.
3. **Rental duration** — Longer rental periods mean more continuous interest flow.
4. **Interest rate** — The `interestRatePerSecond` set by the protocol owner determines the annual yield rate.

***

## Bond principal safety

The yield mechanism is built on a mathematically guaranteed principal floor:

* The vault lends `bondAmount` to each launch.
* That ETH goes into a Uniswap V4 full-range LP position.
* Buyers must deposit ETH to receive tokens; sellers must return tokens to get ETH.
* The vault's LP position captures all ETH net flow. On withdrawal, recovery ≥ bondAmount always.

```
Recovery ≥ bondAmount because:
  Pool ETH = bondAmount + net buyer deposits
  Net buyer deposits ≥ 0
```

The vault cannot lose bond principal through any trading activity, dev dumps, or token failure. The only systemic risk is smart contract bugs — mitigated by fixed supply (no mint), locked LP NFT (no transfer), and full-range positions (no concentrated range drain).

***

## Interest rate parameter

`interestRatePerSecond` is a WAD (1e18 scale). To convert APR to per-second rate:

```
interestRatePerSecond = APR_in_bps × 1e18 / 10_000 / 31_536_000
```

For example, 5% APR:

```
0.05 × 1e18 / 31_536_000 ≈ 1,585,489,600
```

The owner can adjust this rate via `configure()` without affecting the bond principal guarantee.