> For the complete documentation index, see [llms.txt](https://docs.hypha.sh/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.hypha.sh/liquid-staking/pstavax/yield-stripping-mechanism.md). # Yield-Stripping Mechanism The yield-stripping mechanism is the process that allows `pstAVAX` holders to exchange their ongoing staking yield for **additional incentives and perks directly from Hypha**. It's a deliberate choice for users who believe the value of these direct incentives will be greater than the accumulated staking yield over time. ### **Where Does the Yield Go?** The process is straightforward: 1. 100% of the yield generated by the `AVAX` that backs `pstAVAX` is periodically collected. 2. This collected yield is then donated directly into the **`stAVAX` vault**. 3. This action increases the total value of the assets in the `stAVAX` vault, providing a direct boost to the APY for all `stAVAX` holders. ### How It Works? 1. **Deposit and Stake**: When you deposit `AVAX` for `pstAVAX`, your `AVAX` is sent to the `stAVAX` vault to begin generating yield, just like any other deposit. * **Yield Accrual**: The `pstAVAX` contract holds `stAVAX` shares on behalf of its depositors. Over time, these shares increase in value as they accrue staking and MEV rewards. * **Identifying the Yield**: The contract continuously tracks the difference between the initial principal deposited and the current, higher value of the `stAVAX` shares it holds. This difference is the **excess value**, which represents the yield. * **Stripping and Donating**: Periodically, this excess value (the yield) is "stripped" from the contract and sent to the `stAVAX` vault, increasing its value for `stAVAX` holders. This leaves the `pstAVAX` contract with only the principal value required to back all `pstAVAX` tokens at their original 1:1 deposit rate. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.hypha.sh/liquid-staking/pstavax/yield-stripping-mechanism.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.