Every Royco Dawn market channels yield from a single underlying source. The Yield Distribution Model (YDM) governs how those returns are divided between Senior and Junior depositors. The core principle is simple: Junior earns a risk premium for providing first-loss protection, and the size of that premium scales automatically with supply and demand. When Junior capital is scarce, Junior earns more. When Junior capital is plentiful, Junior earns less. No governance votes or manual adjustments are ever required.Documentation Index
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The Yield Curve
Each market defines three parameters at creation that anchor Junior’s yield share at key points along the utilization spectrum. Together they trace a curve — flat at low utilization, steep near the top.| Parameter | Utilization Point | What It Represents |
|---|---|---|
| Y0 | 0% utilization | Junior yield share when capital far exceeds the minimum coverage requirement |
| YT | 90% utilization | Junior yield share at the target operating point |
| Y100 | 100% utilization | Junior yield share when Junior is exactly at the coverage floor |
Below 90% Utilization
Below the 90% target the curve is essentially flat — Y0 and YT sit close together. When Junior capital is plentiful, the excess supply dilutes the risk premium. Junior depositors are still earning above the base yield, but the incremental reward for additional coverage capacity is modest. This reflects the reality that Senior depositors are well-protected and do not need to bid aggressively for more coverage.Above 90% Utilization
Above 90% the curve turns steep. Y100 is set notably higher than YT, meaning that as Junior capital becomes scarce the yield share ramps aggressively. The purpose is direct: when coverage is tightening and the market needs more Junior capital, the economics must be compelling enough to attract it. Y100 is calibrated per market so that a fully utilized Junior tranche earns a yield attractive enough to draw in new depositors before the 100% ceiling — and its associated lockout — is reached.Self-Adapting Over Time
The three curve parameters do not stay fixed. The yield curve adapts to sustained market conditions:- Persistently high utilization causes the curve to shift upward, offering Juniors a larger premium to attract new capital.
- Persistently low utilization causes the curve to shift downward, reflecting the reduced need for additional coverage.
What Depositors See
The APY displayed in the Dawn interface is the trailing 24-hour APY — the annualized rate derived from actual yield accrued over the previous 24 hours. A 7-day average is shown alongside it as a smoother reference. Both figures are backward-looking: they reflect what the market earned, not what it will earn.Displayed APY is backward-looking. If utilization shifts or capital enters or exits the pool, future yields will differ from the figures shown.