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

# How Nara generates yield

**Payment financing (PayFi) is short-duration working capital for businesses whose money is on its way but has not yet arrived.** A payment company that wants to pay a recipient today, before the sender's fiat has cleared, borrows for the gap and pays a premium. Nara lends into that gap on-chain and passes the premium to NaraUSD+ holders.

#### One transaction, start to finish

| Step                 | What happens                                                                                                               | Typical timing      |
| -------------------- | -------------------------------------------------------------------------------------------------------------------------- | ------------------- |
| 1. Payment initiated | A sender pays fiat into the payment company's local account (for example, a remittance from the United States to India).   | T+0                 |
| 2. Credit drawdown   | The payment company draws stablecoin from a Nara-funded facility, 24/7 including weekends, to fund the payout immediately. | Minutes             |
| 3. Payout            | The destination payment partner pays the recipient in local currency.                                                      | Seconds to hours    |
| 4. On-ramp           | The sender's fiat clears and is converted back to stablecoin.                                                              | Hours to a few days |
| 5. Repayment         | Principal plus the financing premium returns to the Nara vault. The premium accrues to NaraUSD+.                           | Hours to five days  |

The whole cycle typically completes in hours to a few days. The premium reflects what faster settlement is worth to the borrower: the ability to pay out on a Saturday, to skip pre-funding accounts in every corridor, or to grow volume without raising equity to fund float.

#### Where the demand comes from

Settlement gaps appear wherever a business pays before it collects.

| PayFi use case          | What creates the financing need                                            |
| ----------------------- | -------------------------------------------------------------------------- |
| Remittance settlement   | Providers pre-fund payouts across corridors while sender funds clear.      |
| Merchant settlement     | Merchants want receivables before card networks settle.                    |
| Payment processors      | Processors bridge timing between merchants, banks and networks.            |
| Card acquiring          | Acquirers bridge customer payment, network settlement and merchant payout. |
| B2B payouts             | Platforms pay vendors and contractors before incoming funds clear.         |
| Stablecoin on/off-ramps | Ramps need short-term liquidity to support inflows, outflows and treasury. |

#### Market context

Stablecoin use in cross-border payments is growing at roughly 35% year over year but remains about 1% of global FX payment flow (an estimated $1.9 trillion of $194 trillion annually). Pre-funded accounts hold an estimated $5 trillion of idle capital globally, an implied $200 billion of lost interest each year.

#### From premium to NaraUSD+ yield

1. Borrowers pay the financing premium into the vault as flows settle.
2. A 10% share of gross strategy yield, about 1% of assets a year at the target rate, is retained in the Insurance Fund. It stays in the holders' own first-loss buffer. This is the only deduction at launch; Nara takes no protocol fee until a later stage.
3. The remainder is written into the NaraUSD+ exchange rate through the three-stage NAV process, bounded by the on-chain mint cap.

#### How this differs from typical DeFi yield

The return is linked to payment volume and working-capital demand, not to token emissions, crypto leverage or funding rates. It carries its own risks in exchange: borrower performance, settlement timing, operational execution, legal structure and concentration. Evaluate it through both a yield lens and a risk lens; the Portfolio, Risks and Insurance Fund pages exist for that purpose.


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