# APY

ELUSD’s target yield is calibrated using five years of historical Kimchi Premium market data and multiple strategy models. In backtests, some configurations produced annualized results exceeding 40%, and certain parameter sets achieved cumulative returns of more than 43%. However, we are acutely aware that markets cannot be predicted with 100% certainty, and we therefore place a strong emphasis on downside risk management and robustness over chasing headline returns. Based on a conservative interpretation of our backtesting results, we have set ELUSD’s initial target yield at 18% APY, with the expectation that, as the strategy scales, the sustainable target yield will gradually normalize into the low-teens (around 10%+) range.

Over time, as market efficiency improves and the Kimchi Premium and related arbitrage spreads compress, the gross return opportunity from these inefficiencies is likely to decline—since our strategies earn yield by capturing such mispricings. At the same time, we expect part of this effect to be offset by continuous refinement of our models, execution routes, and risk controls, which can enhance capital efficiency and reduce slippage and idle balances. The protocol will continue to adjust its target yield dynamically in response to actual trading performance and market conditions, with any material changes communicated transparently to users before they take effect.
