Injection Protocol

Introduction

At Escher, we’ve always believed that Liquid Staking Tokens (LSTs) must go beyond just locking assets. An LST only has value if it can interact with DeFi, generate real yield, and outperform vanilla staking.

But how do you ensure that increased TVL in a DEX, lending protocol, or LP pool actually translates into better returns for your LST holders?

Today, we’re excited to unveil the answer: The Injection Protocol — Escher’s native mechanism to capture DeFi yield and return it directly into the staking economy, increasing APR without inflating token supply.

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The Concept

Escher is deploying strategic positions across various DeFi protocols using its chain-abstracted LST design. Because Escher operates cross-chain, we can build flexible strategies that extract real yield — not just speculative points farming.

While point systems are trending, they’re unpredictable and often controlled by internal team discretion. Escher is focused on something more sustainable: real token flows and predictable APR directly into your eBABY position.

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How It Works

1. Escher opens a strategic position (e.g., LP on Tower, lending on Euler, etc.)

2. Escher collects protocol fees (usually in BABY)

3. Escher injects those BABY fees back into the staking vault, without minting new eBABY

4. Resulting in a boost in value of each eBABY

This creates a positive feedback loop between the DeFi protocol and the eBABY token:

Higher DeFi usage → more fees → more BABY injected → higher eBABY value → more staking demand.

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Technical Structure

1. eBABY Valuation Model

Each eBABY is backed by a pool of staked BABY tokens.

$$p = \frac{B}{S}$$

Where:

• = total BABY backing

• $S$= total eBABY supply

• $p$= value of one eBABY

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2. Monthly BABY Injection

Each month, Escher injects an additional amount of BABY () into the staking vault, without minting new eBABY:

$$p_{new}= \frac{B + \Delta B}{S}$$

This increases the value of each eBABY over time — boosting user APR without token inflation.

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3. Impact on APR

The APR from injection alone:

$$APR_{injection} = \frac{12 \times \Delta B}{S}$$

Where:

• $\Delta B$= Monthly BABY added to the vault

• $S$= Total eBABY supply

And total APR becomes:

$$APR_{total} = APR_{\text{staking}} + APR_{\text{injection}}$$

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Why This APR Model Is Unique

In typical staking systems, APR decreases as more tokens are staked:

$APRchain=\frac{\text{Inflation}}{\text{Staking Ratio}}

More stakers → smaller piece of the pie.

But Escher’s Injection Protocol breaks that pattern.

The injected rewards come from external DeFi strategies, not the chain’s inflation or validator pool. This means:

• The injected BABY is not split proportionally by staked supply.

• It's added directly to the vault without minting new eBABY.

• More capital does not reduce APR, and might even increase it, if the strategies scale efficiently.

🔁 Real Yield, Not Just Inflation

This mechanism creates non-dilutive APR:

• It doesn’t rely on new token issuance

• It’s not capped by on-chain inflation curves

• It’s fueled by real usage and strategy performance (e.g. LP fees, lending yield)

This leads to one of the core benefits of the Injection Protocol:

More TVL → more DeFi activity → more fees → more BABY injections → higher APR.

Not the other way around.

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🌐 Why It Matters

This model makes holding eBABY more rewarding than native staking, while maintaining decentralized infrastructure and avoiding token inflation. It’s fully composable, chain-abstracted, and aligned with real usage — not speculative hype.

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