> For the complete documentation index, see [llms.txt](https://docs.elara.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.elara.fi/products/yield-generation.md).

# Yield Generation

Elara targets low-to-mid teens annualized returns. Actual performance fluctuates with market conditions; nothing is guaranteed. Every position is stablecoin-denominated with no directional exposure. All activity is market making on stablecoin pairs.

Returns are generated through **concentrated liquidity market making (CLMM)** on stablecoin pairs, managed by external execution partners (currently Arken) under risk parameters set by the Elara Engine. Capital is placed into tight price ranges on AMM pools, earning fees from trading volume. Narrower ranges mean better capital efficiency and higher fee capture compared to full-range liquidity.

Concentrated liquidity positions earn well precisely because they are narrow, and narrow ranges are exposed if an asset leaves the range. For stablecoin pairs that means depeg risk, which is an inherent vulnerability of any stablecoin-centric strategy rather than something specific to this one. It is the reason the strategy is actively managed rather than passive: ranges can be contracted, collateral composition shifted, and positions unwound ahead of a dislocation. Active management reduces the exposure; it does not remove it.

ArkenYield applies its own stablecoin rating and risk framework and maintains relationships across issuers, protocols, and liquidity providers. This improves our ability to identify risks early, diversify underlying stablecoin exposures, actively reduce concentration, and unwind positions where appropriate. Capital preservation is the objective that shapes the mandate, and it is an actively managed one rather than a guarantee.

## How fees work

**How fees work**

The fee stack has three components: execution partner fees with management and performance elements, Utila infrastructure costs, and an Elara protocol revenue share.

**Elara and Arken have both currently waived their management and performance fees** as a joint growth measure. The contracts carry the mechanism, and contract-level amounts are retained or recycled within the system rather than paid out as revenue.

Fees will return once the fee model is reworked. Current yields are gross of fees that will eventually apply. There are no token incentives and no circular reward structures; yield comes from trading fees earned in real markets.