> 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.