CAPY represents the current offered Annual Percentage Yield (APY) per held token. Each token receives an equal share of the DAO portfolio’s free cashflows.
There is a symbiotic relationship between several elements in the DAO and the Current Annual Percentage Yield (CAPY), but the overall goal of the DAO Founders and DAO Core Team is to ensure the DAO maintains its Target Annual Percentage Yield (TAPY).
Based on a variety of factors (explored below), CAPY can vary from month to month as differently profitable businesses are acquired, but it will also maintain a peg based on the dividend yield set by the acquired product to meet the peg.
On a day to day basis, the paper CAPY can slowly slide down as new tokens are emitted and total supply grows. However, it shoots back up with every new acquisition by the end of the month.
This effect doesn’t affect DAO Membership as distributions are monthly and the Current Annual Percentage Yield (CAPY) re-pegs at every acquisition, which happens every month.
Thus, another important element of maintaining the Target Annual Percentage Yield (TAPY) is to maintain a strong Dealflow Velocity to close deals quickly, aggressively and before yield day every month.
The treasury will have plenty of leftover to pay yield while acquisitions close but the DAO Dealflow Team’s pace should be monthly.
The goal of the DAO Governance and smart contracts should be to algorithmically adjust the Dividend Yield (or provide Core Teams dividend yield ranges they must meet) relative to the CAPY Formula.