> For the complete documentation index, see [llms.txt](https://docs.earnpark.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.earnpark.com/earnpark-protocol/economic-model.md).

# Economic Model

### Wrapper Backing

Every circulating wrapper is backed by a reserve of the corresponding underlying asset. For this purpose, the protocol maintains separate principal accounting and holds backing for the entire circulating supply of the wrapper token.

### Reserve Yield

The reserve backing the wrapper does not sit idle. It is deployed through an approved adapter in a venue with instant liquidity and generates yield. This yield **is not distributed to wrapper token holders** and **does not convert the wrapper into a yield-bearing token**. Instead, reserve yield is directed to a separate protocol address as a revenue/backstop stream.

> **The economic logic is simple:** reserve yield is protocol revenue, strategy yield is strategy users' revenue, and the wrapper token is the base transport layer — not a yield-bearing asset.

### Strategy Economics

Each strategy has its own economics: a separate share token, its own exchange rate, its own redemption fee, its own cooldown, and its own limits on external allocations. User yield arises only at this level.