LP yield on Fira comes from three independent sources, each with its own driver and risk profile. Understanding them helps you model what to expect — and why the projected range is 5–13% APR.

The three sources at a glance

Source	How it works	Analogy
Swap fees	Every BT/FW trade in the AMM generates fees distributed to LPs proportionally to their pool share.	A market maker earning the spread on each trade.
Net lending interest	The pool accumulates BT at a discount. As maturity approaches, BT converges toward its face value. The gap between entry price and par is the interest the pool earns.	A bond bought at 95 cents maturing at $1.
Rehypothecation yield	~10% of FW reserves are deployed into variable-rate lending vaults (SisuVault). Interest from those borrowers accrues to the FW exchange rate, benefiting LP positions.	A bank putting its idle reserves to work.

Source 1: Swap fees

Every time someone enters a fixed-rate borrow, purchases a lending position, rolls to the next maturity, or arbitrages the rate, they execute a trade in the BT/FW AMM. Each of those trades generates a fee.

Fees are collected continuously and distributed to LPs in proportion to their share of the pool. The more volume the market sees, the more fee yield you collect.

What drives it: Trading volume. Active markets with borrowers entering and lenders exiting will generate more fees than thin, low-activity pools.

Source 2: Net lending interest

When borrowers enter a fixed-rate position, they receive BT at a discount relative to FW. That BT ends up in the LP pool. Over time, as the maturity date approaches, BT price converges toward parity with FW — because at expiry, BT redeems 1:1.

The difference between the discounted price the pool paid for that BT and the 1:1 redemption at maturity is the lending interest earned by the pool. A higher implied rate in the market means a deeper BT discount — which translates to more interest captured at settlement.

What drives it: The implied fixed rate of the pool. Higher rates = larger BT discounts = more interest at settlement.

Source 3: Rehypothecation yield

Fira keeps approximately 90% of FW reserves in liquid form at all times. The remaining ~10% is deployed into SisuVault — an internal lending vault that supplies USDC to variable-rate borrowers (using collateral such as wstETH and cbBTC).

The interest those borrowers pay flows back through the FW exchange rate: over time, each unit of FW represents slightly more USDC than it did before. This appreciation benefits anyone holding FW or LP tokens backed by FW.

The target reserve ratio is 90% idle / 10% deployed. The protocol rebalances automatically to stay within tight bounds (89.89% minimum idle, 91% maximum idle). This means at most ~10% of your capital is ever at work in the variable vaults — the rest remains liquid.

What drives it: Utilization and borrowing demand in the variable-rate vaults. Higher demand from borrowers = more interest flowing to FW holders.

CT tokens: your rehypothecation exposure handle

When you deposit into a pool, the protocol gives you CT tokens alongside your LP token. CT tokens represent a direct claim on rehypothecation yield.

You have two options:

Hold CT to maturity — collect all rehypothecation yield as it accrues over the life of the market.
Sell CT immediately — monetize the present value of the expected future yield right now. The market price of CT reflects the discounted value of future cash flows.

Neither is "better" — it depends on your view of future variable rates and your liquidity needs.

Projected yield: 5–13% APR

This range reflects different assumptions about trading volume, implied fixed rates, and rehypothecation utilization. It is not a guarantee.

Component	Benchmark comparison
Swap fees + net lending interest	Comparable to Pendle LP yield
Rehypothecation yield	Comparable to Morpho curated vault supply yield

What moves you inside that range:

Volume — low-activity markets generate less fee yield
Implied rates — higher rates = deeper BT discounts = more interest at settlement
Pool size — more total liquidity dilutes fee yield per LP
Rehypo demand — variable borrower demand determines rehypothecation returns