FORGE emissions vs vault yield — keep them separate

Why USDC adapter yield and FORGE token emissions must not be blended in agent prompts or marketing copy.

Last updated: May 25, 2026 · Published 2026-05-25

Forge Treasury produces two distinct economic flows: USDC yield from external protocols (Spark, Morpho, Aave, Middle adapters) and FORGE token emissions from the `RewardDistributor` Merkle program. Conflating them in a single "APY" headline is misleading and triggers compliance red flags. Agents and marketers must keep the streams separate — see Risks & Disclosures and Tokenomics.

Two streams — side by side

Vault yield (USDC-denominated)

Vault yield accrues inside ERC-4626 share price as adapters earn interest or exchange-rate gains. It is variable, protocol-sourced, and denominated in USDC NAV. May 2026 observations for Core stable legs cluster around ~3.5–4% at the underlying level (Aave Base USDC, Morpho Steakhouse Prime) — a research snapshot, not a promise. Middle legs mix non-USDC risk premia — see Balanced strategy.

• Displayed on Stats as share price / total assets when subgraph data is fresh.
• Subject to 15% performance fee on profits at withdraw (high-water mark mechanics).
• Not tied to FORGE token price.
• Conservative routing captures Core legs only — Conservative strategy.

FORGE emissions (usage subsidy)

600M FORGE from the incentives pool emits over 24 months via weekly Merkle roots. Depositors claim tokens; emissions are not auto-compounded into vault shares. FORGE is intended as a protocol usage and governance token — an inflationary subsidy, not a return on investment.

• Claim requires a separate transaction with Merkle proof.
• Emission rate is front-loaded in months 0–6 — not a perpetual APR.
• Token may be illiquid; no price targets or appreciation claims.

Illustrative APY on the site and MCP

Forge displays target / illustrative blends such as ~3.7% USDC + 2.0% FORGE boost in constants and MCP config. These are planning assumptions for UX — not guaranteed combined returns. Realised outcomes depend on adapter rates, claim behavior, FORGE market price (if any), and fee drag. Never present the sum as "earn X%" in headlines. MCP integrators should read Docs for current constant names without treating them as realised APY.

Why blending is a compliance problem

• USDC yield is variable lending/savings income — protocol-sourced, fee-adjusted.
• FORGE is inflationary token distribution — separate tax, legal, and marketing treatment.
• Combined "boosted APY" implies a guaranteed total return — prohibited pre-counsel.
• FORGE value at claim time is unknown; adding a static bps boost misleads agents.

Performance fee interaction with reported yield

Vault yield accrues gross in share price, but 15% performance fee on withdraw profits (above high-water mark) reduces net realised return for exiting depositors. Agents comparing Forge to raw Aave or Morpho supply must include fee drag and holding period. FORGE emissions are not fee-adjusted at claim — they are separate tokens with uncertain value.

MCP constants vs on-chain reality

MCP and site constants may expose `BASE_APY_BPS` and FORGE boost assumptions (~370 bps + ~200 bps illustrative). These exist for UX planning — not as oracle feeds. Agents must override with live adapter observations where policy requires accuracy. The CTO brief documents known mismatch risk between defaults and realised Core yield; treat defaults as placeholders until dynamic rate feeds ship.

Agent prompt hygiene

1. Report vault share price change as USDC yield proxy.
2. Report unclaimed FORGE separately with "variable subsidy" language.
3. Link users to Risks & Disclosures before deposit.
4. Never promise FORGE value or "boosted APY" as fixed.
5. Use MCP-native treasury tools for calldata — not APY promises.

Example agent reporting (R4-safe)

Weekly Merkle root updates for FORGE mean emission accrual is discrete, not continuous like share price. Agents displaying "pending FORGE" should read distributor contract state and label amounts as unclaimed subsidy subject to root publication delays or bugs. Forge contracts are unaudited — Merkle root errors, while unlikely, are part of disclosed smart-contract risk on Risks.

Tax and accounting note (non-advice)

USDC vault yield and FORGE token claims may receive different tax treatment in your jurisdiction — consult qualified professionals. Share price accrual is not necessarily "interest income" in all frameworks; FORGE claims may be ordinary income or property receipt at claim-time fair value. Forge does not provide tax reporting tools in MVP. Agents should log deposit, withdraw, share price, and claim events separately for downstream accounting systems.

Blending streams into one APY figure creates compliance risk in marketing and accounting misclassification. Use separate ledger accounts for fUSDC NAV changes vs FORGE wallet receipts. Link users to Tokenomics, Risks & Disclosures, and protocol guides Spark, Morpho, Aave for underlying yield sources.

Appendix: sample agent user disclosure block

Copy-paste disclosure template for agent builders (adapt to your jurisdiction and counsel guidance): "Forge Treasury vaults on Base mainnet accrue variable USDC yield via third-party protocols (Spark, Morpho, Aave, Middle adapters). Forge contracts are unaudited. FORGE token emissions, if claimed, are a separate Merkle subsidy — not vault yield, not a fixed rate, and not a promise of token value. Past rate observations (~3.5–4% underlying Core snapshot, May 2026) are not forward promises. Read Risks & Disclosures and Tokenomics before depositing."

Marketing teams sometimes request a single "boosted APY" number for landing pages — R4 research flags this pre-counsel. Use two-column layouts: "Variable USDC yield (adapter-sourced)" and "FORGE usage subsidy (optional claim)." Link Stats for share price and Conservative strategy for simplest deposit path. MCP constants (`BASE_APY_BPS`, FORGE boost bps) are UX placeholders until dynamic feeds ship.

Frequently asked questions

Can I auto-compound FORGE into the vault?

Not in MVP. FORGE requires explicit Merkle `claim_forge` with proof. Claimed FORGE sits in the user wallet — redeposit would be a separate manual or agent policy step. Do not describe emissions as "auto-yield."

Why does the site show ~3.7% + ~2.0%?

Illustrative UX constants for planning — USDC adapter target plus FORGE boost assumption. Realised USDC yield varies with Spark, Morpho, and Aave rates. FORGE value at claim is unknown. Never sum into one headline.

Do FORGE emissions affect share price?

No. Share price tracks adapter NAV only. FORGE is external to ERC-4626 accounting. Agents plotting total return must chart two series: fUSDC share price delta and cumulative claimed FORGE (mark-to-market if policy allows).

What is front-loaded emission risk?

40% of the 600M incentive pool emits in months 0–6. Early depositors may receive larger FORGE allocations per dollar-time than later ones — but token liquidity and value are uncertain. This is subsidy design, not vault yield acceleration.

Summary for agents

Keep economic streams separate: USDC vault yield accrues in ERC-4626 share price from Spark, Morpho, Aave, and Middle adapters; FORGE emits via 600M-token Merkle schedule (40% front-loaded months 0–6) requiring explicit claim. Never publish combined "boosted APY." Site/MCP illustrative ~3.7% USDC + ~2.0% FORGE = planning UX only. Use disclosure template above; Tokenomics, Conservative path, Risks. Unaudited contracts.