Interest, yield, and minting

Revenue model

Latens earns from two independent, usage-driven streams — both settle in real assets already moving through the protocol, not in emissions of a native token:

1. A reserve-factor share of borrower interest on LatensPool. Every repay charges a real, time-weighted interest fee; a configurable reserve-factor slice of it is swept to ProtocolTreasury, and the rest compounds directly into suppliers' yield. See The fee is settled against collateral below.
2. A one-time origination fee on LatensCDP. Charged when LatensDollar is minted against posted collateral — the entire revenue mechanism on the minting side, since individual minted amounts stay confidential and can't be metered any other way.

ProtocolTreasury.sweep() is permissionless (any keeper can trigger it, so fees never sit idle waiting on an admin) and splits what it collects three ways, by configurable rate:

Destination	Default	Cap
ZEN staking rewards pool	17.5%	20%
SupplyRewards top-up	15%	30%
Protocol runway	remainder (~67.5% by default)	—

The SupplyRewards top-up is what keeps supplier incentives funded by real usage rather than counting down from a fixed initial grant — see Supplier rewards funding below for how that loop closes.

Interest is utilization-driven

AssetRegistry holds a kinked interest rate model per listed asset. LatensPool.repay charges a genuine, time-weighted fee computed over the exact elapsed time since the position's debt was last touched, not a flat placeholder.

The fee is settled against collateral, not the borrowed asset

A borrower repays exactly the principal they drew. The interest owed on it is converted at oracle prices into the collateral asset and deducted from the position's collateral commitment instead of being pulled as a second helping of the borrowed token.

This is a deliberate correction rather than a stylistic choice. Charging the fee in the borrowed asset made a loan impossible to close: someone who draws 20 ZEN holds exactly 20 ZEN, and clearing the debt then cost 20 ZEN plus a fee they had no way to fund short of acquiring more of the asset they had just borrowed. Because debt sizes are confidential, there is also no way to quietly grow the debt commitment by the fee instead. Collateral is the one balance a borrower is guaranteed to have already posted.

The conversion depends on two oracle prices and the supply index, all of which move between a caller reading them and the transaction being mined, so the pool takes the collateral burn as a floor rather than an equality: a caller may burn more collateral than the fee strictly requires, never less.

Suppliers earn a real, compounding yield

Position commitments encode shares of a per-asset index (AssetRegistry.currentSupplyIndexRay, RAY-scaled), not raw token units. The index is driven by supplyRateRay, held at 1e18 rather than in basis points because a supply rate is a borrow rate scaled down twice, by utilization and again by the reserve factor, and a young market's lands well under a basis point where integer rounding would erase it entirely.

Only the reserve-factor slice of a repayment's interest moves on to ProtocolTreasury; the rest stays in the pool.

Known gap: fee denomination versus index denomination

Because fees now arrive in the collateral asset while each market's index is driven by that market's own rate model, a borrowed market's index grows whether or not that market received the fee. A supplier's claim on the borrowed asset therefore grows without that particular borrower's fee funding it. Closing this needs either a swap of the fee into the borrowed asset at repay time or an index driven by realized fees rather than a rate model; on the current testnet deployment the seeded liquidity absorbs the difference. test/LatensPool.yield.test.js pins the behaviour so it cannot be mistaken for fixed.

The solvency and liquidation-eligibility circuits value a position at amount * index / RAY before pricing it. The index is applied to the amount first, deliberately, rather than folded into the price. See each circuit's own documentation for why.

The debt side of a position, and everything about LatensCDP, is not index-scaled. Both circuits accept a debtIndexRay input generically, but every caller today passes RAY (a no-op), matching the flat-fee interest LatensPool.repay already charged before index-scaling existed on the supply side.

Confidential stablecoin minting

LatensCDP reuses the same commitment-and-solvency-proof discipline as LatensPool: lock Pedersen-committed collateral, mint LatensDollar against it, and pay a one-time origination fee. That fee is the entire revenue mechanism on the minting path: per-position minted amounts cannot be distributed proportionally without revealing them, for the same reason individual borrow amounts cannot be on the lending side.

LatensCDP shares AssetRegistry's listed collateral assets and their LTV and liquidation parameters, but keeps its own aggregates. AssetRegistry.recordSupply and recordBorrow are gated to the single pool address, which LatensPool already occupies, so LatensCDP tracks its own state rather than contending for that same slot.

Supplier rewards funding

SupplyRewards pays a flat, per-epoch reward to any address with an active supply position that checks in during that epoch. Funding is not a one-time grant that only ever counts down: ProtocolTreasury routes a configurable share of swept interest revenue into SupplyRewards.fund() on every sweep (15% by default, capped at 30%), so the rewards programme's runway scales with real usage instead of a fixed initial balance.