Burning TBDs (FlashBurn)
Redeeming TBDs for value
When a user burns their TBD tokens, they can withdraw yield from a Yield Pool. Some TVS also have a Boost Pool that provides extra yield on top of the Yield Pool yield.
The information provided in this article pertains exclusively to strategies developed by the Flashstake DAO. The process of burning TBDs may vary for strategies developed by external parties.
The assets received upon burning TBDs are proportional to the user’s relative ownership of the total TBD supply for that specific strategy and the size of the yield pool. For example, if a user holds 45% of the total TBD supply for a given strategy, they could choose to burn all of those TBDs and redeem 45% of the value within that strategy’s yield pool.
For demonstration purposes, consider a scenario where the AAVE strategy has 400,000 USDC in its associated yield pool and 10,000 TBDs in existence. If you decide to Flashstake 30,000 USDC for 365 days, approximately 30,000 TBDs will be minted, making the total number of TBDs for this AAVE USDC strategy to now be 40,000. Your 30,000 TBDs represent 75% ownership of the yield pool, so if you burn all of your TBDs you can redeem approximately 300,000 USDC.
The numbers presented in this example are for illustrative purposes only and should not be treated as actual values or guarantees. Additionally, it is important to note that the TBD minting formula varies depending on the strategy in question. Strategies developed by the Flashstake DAO utilize the formula specified in the TBDs section of the documentation.
To burn TBDs, a user can call the “burnFToken” function in the associated strategy. Alternatively, this process can also be accomplished in a single transaction using the Flashstake feature which executes a mint and burn in the same transaction.
Yield is typically calculated as a percentage of the employed capital and can be represented as Annual Percentage Rate (APR) or Annual Percentage Yield (APY). The formula for calculating the upfront APR is as follows: