💰Interest Rate, Exchange Rate, Fees

Learn more about interest rate, exchange rate, and fees for the SOL Staking Yield Vault

Summary

TLDR; Returns are expressed as vault token-to-USDC exchange rate. This exchange rate is determined by the underlying performance of the collateral. As the collateral increases in value, so to do the vault tokens.

In the SOL Staking Yield Vault, Lender's returns are determined by the performance of the underlying delta-neutral SOL Strategy. Each day, the total returns are translated into a Collateral Rate. The Collateral Rate for each day determines how much the exchange rate between USDC and xFIGSOL will increases.

This exchange rate can be used to determine the value of a given position and the change in exchange rate over time can be used to calculate the returns over that period.

The vault also provides an indicative interest rate, which is the trailing 12-month return on the strategy. The indicative interest rate is used to provide Lender's an idea of the types of returns the vault could experience.

Example

On Day 1, the exchange rate between xFIGSOL and USDC will be 1.00000. The collateral returns 15.00% APY in 12 months. The exchange rate after 12 months will be 1.150000, meaning 1 xFIGSOL can be redeemed for 1.15 USDC. When the lender redeems 1 xFIGSOL, they receive 1.15 USDC representing a return of their principal (1.00 USDC) and their accrued interest (0.15 USDC).

Collateral Rate

The collateral rate determines the gains of a Lender's position on a daily basis.

It is calculated by applying (i) the sum of income received by the Borrower with respect to the Collateral (including any amount of net profit realised through the sale or redemption of the Collateral) with respect to that Loan and/or (ii) any increases to the market value of the Collateral (and deducting any decrease to the market value of the Collateral, such that the Collateral Rate may be negative). The collateral rate is calculated daily and expressed as an annual percentage yield (APY).

The following calculation is used to determine the Collateral Rate

Daily Collateral Rate* =

(Collateral value T₁ - Collateral value T₀) + Income**​

—------------------------------------------------------------------— x100 - Daily Fee

Collateral value T0

*If “ending value” is lower than the initial value, the daily collateral rate can be negative.

**Income refers to yield payments actually paid onto the Borrower's account

Collateral Value

The Collateral Value for the SOL Staking Yield Vault is calculated by the Investment Advisor using the following formula:

Collateral Value = Long Value + Short Value - Daily Fees

Where:

Long Value = (Quantity of staked SOL (Q) + quantity of SOL rewards paid (R)) x spot price in USD on Day (P)

Short value = (Q) ×(entry price (P0)​− ( P) ) + (R ) x (entry price (P0)​− ( P) ) if hedged

Daily Fees = [ 0.9% x Total Principal Earning Interest + 0.2% x Long Value] / 365

Valuations are made using publicly available data sourced from the exchange on which the collateral is held.

Exchange Rate

The exchange rate is an on-chain number that determines how many vault tokens are issued when an investment is made and how many vault tokens are redeemed when a lender withdraws.

The exchange rate can be used to determine several important data points:

1. Estimated value of the vault's collateral

Total Vault Tokens Outstanding * Exchange Rate

2. Portion of the vault collateral a specific lender has a claim over

Lender's Vault Token Balance / Total Vault Tokens Outstanding

4. Value of a Lender's position

Lender's Vault Token Balance * Exchange Rate

5. Returns over time, both absolute and as a %

ΔE =Et−Et0

Where:

• E_t = exchange rate at the later time t

• E_t0​​ = exchange rate at the earlier time t₀

• ΔE = absolute change in the exchange rate

If you want the percentage change (relative change) instead of the absolute difference:

%ΔE= [(Et−Et0) / Et0] * 100

Calculation and Setting the Exchange Rate

The Investment Advisor updates the exchange rate at 9:30am GMT each day (T0).

The calculation for the exchange rate is as follows:

Collateral Value / Total Vault Tokens Outstanding

Indicative Interest Rate

The indicative rate represents the 12-month trailing returns of the strategy. This gives investors a sense of the type of returns they can expect from the vault but is not a guarantee or

Fees

The total fees charged for the product is 0.50% per annum. This is translated into a Daily Fee and deducted from the exchange rate, such that fees are accrued off-chain and not explicitly paid by Lenders.

The breakdown is as follows

Term	Definition	Payable By / To	Amount
Advisor Fee	A fee charged by the Advisor (AWR) to cover the costs of advising OpenTrade SPC in buying / selling and managing the portfolio of Loan Collateral.	Payable by the Borrower Paid to the Advisor	0.60% per annum
Platform Fee	A fee charged by the Platform Provider to cover the costs of developing and maintaining the OpenTrade Platform and related expenses.	Payable by the Borrower Paid to the Platform Provider	0.50% per annum