User Return Modeling

To demonstrate the full economics of the BOUND protocol, we analyze a complete user journey from initial purchase of DFY through yield generation to final liquidation, using current market conditions and a 13.83% annual DFY+ appreciation rate as calculated in the DFY+ Price Appreciation Model

1

Initial Purchase

A user begins with $100 USDC and purchases DFY through the DFY/USDC Uniswap pool:

• Transaction: $100 USDC → 99.45 DFY

• Costs: 0.3% Uniswap pool fee + 0.25% Uniswap service fee = 0.55% total ($0.55)

• User holds 99.45 DFY stablecoins, minus any slippage if applied

2

DFY to DFY+ Conversion

To gain exposure to protocol yield generation, the user converts DFY to DFY+ tokens:

• Conversion Fee: 0.8867% applied to DFY balance

• Effective Conversion: 99.45 DFY → 98.56 DFY+ (after fees)

• Initial DFY+ Price: 1 DFY = 1 DFY+

• Settlement: 7-day cooling period before tokens become claimable

3

Yield Generation Period

Over twelve months, DFY+ appreciates through protocol revenue streams:

• Annual Appreciation: 13.83% (as calculated in DFY+ Price Appreciation Model)

• Annual DFY+ Price: 1.1383 DFY

4

DFY+ to DFY Conversion

After one year, the user converts appreciated DFY+ back to DFY:

• Position Value in DFY: 98.56 DFY+ multiplied 1.1383 DFY = 112.19 DFY

• Conversion Fee: 0.8867% applied to received DFY balance

• Net DFY Received: 111.19 DFY (after fees)

• Settlement: 7-day cooling period

5

Final Liquidation

The user sells DFY tokens back to USDC through Uniswap:

• Transaction: 111.19 DFY → 111.19 USDC

• Costs: 0.3% Uniswap trading fee + 0.25% Uniswap service fee = 0.55% total

• Final Result: 111.80 USDC received

6

Net Return

To calculate the net return, we deduct the initial value in USDC from the final value received

• $111.80 - $100.00 = $11.80 (11.80% annual return)

• Gross APY: 13.83%

• Transaction Costs: 2.27% (Uniswap fees + conversion fees)

• Net APY: 11.80%

This demonstrates that despite comprehensive fee structures designed to ensure protocol sustainability, users retain substantial yield exposure with competitive net returns that significantly exceed traditional banking products and remain competitive within the broader DeFi ecosystem.

Fee Optimization Through BOUND Holdings

Users holding BOUND governance tokens can reduce conversion fees by 25%, paying 66 basis points instead of 88.67 basis points. This optimization increases the net APY while simultaneously supporting protocol tokenomics through BOUND utility demand and token burning mechanisms.