# Mechanics

**How does Solido Grow generate yield?**

Solido Grow earns yield primarily through the liquidation of under-collateralized Troves within the Solido Cash protocol. When such a Trove is liquidated, the protocol captures a portion of the liquidated collateral, converts it into $CASH, and distributes it to $bCASH holders, increasing the exchange rate between $bCASH and $CASH.

**How is the yield distributed to $bCASH holders?**

Yield is reflected in an increasing exchange rate between $bCASH and $CASH. This means your $bCASH balance stays constant, but its value in terms of redeemable $CASH grows over time. This non-rebasing model avoids gas costs and ensures seamless compounding.

**What determines the amount of yield I can earn?**

Yield depends on:

* **Frequency of liquidations** – more frequent liquidations generate more protocol income.
* **Size of liquidations** – larger Troves being liquidated result in more collateral captured and distributed.
* **Market conditions** – volatility may increase the likelihood of under-collateralized Troves and liquidation events.

**How and why does yield fluctuate?**

Since yield depends on liquidation events, it is variable and cannot be predicted. In volatile markets, liquidation frequency and size typically increase, leading to higher APY for $bCASH holders. During calm market periods with fewer liquidations, yield may decrease. Users should understand this is not a fixed-income product, and returns will vary based on ecosystem activity.