Rewards in the ILP grow exponentially proportional to the amount of LODA invested into the pool. In the ILP there are two types of reward strategies:
The IRS strategy provide rewards per LODA invested in the ILP, without a daily limit. This is done to encourage early Loda staking where the pool is not actually insuring anything.
The MRS stategy will unlike the IRS have an upper limit of rewards. These rewards will be distributed between the ILP and SLP based on the current pool and healthy pool ratio.
LODA to USDC conversion will happen in case of defaults. USDC can be borrowed from the treasury by pledging LODA tokens, so they never enter the open market or be bought from the open market directly by selling LODA.
In case of pledging, then the ILP contract is responsible for buying back all the pledged tokens at the pledged at price.
USDC to LODA conversion when collecting ILP fees as USDC and adding it to the ILP as LODA tokens.