💰Interest Rate, Exchange Rate, Fees
Learn more about interest rate, exchange rate, and fees for the SOL Staking Yield Vault
Summary
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 Rate2. Portion of the vault collateral a specific lender has a claim over
Lender's Vault Token Balance / Total Vault Tokens Outstanding4. Value of a Lender's position
Lender's Vault Token Balance * Exchange Rate5. Returns over time, both absolute and as a %
ΔE =Et−Et0
Where:
Et = exchange rate at the later time t
Et0 = 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] * 100Calculation 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
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
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