Vault Liquidity

For every vault, the Vault Creator deposits the necessary liquidity to cover the two potential scenarios:

1) Linked Price Reached

2) Linked Price Not Reached

Since a vault's configuration always includes yield, the Vault Creator must deposit the required yield in both tokens to cover the two possible settlement scenarios.

Simplified example: WETH-USDC Buy Low

Direction	Investment Token	Linked Token
Buy Low	USDC	WETH

In a Buy Low vault:

• The Vault Creator sets the maximum quantity of the Linked Token (WETH) they are willing to sell at the Linked Price.

• Subscribers deposit Investment token (USDC) into the vault for a chance to purchase the Linked Token at the Linked Price.

• The Vault Creator also deposits Investment Tokens (USDC) to provide yield if the Linked Price is not reached.

Here is the deposit formula for creating a Buy Low vault :

Linked token: Quantity / LinkedPrice * (1 +yield)

Investment token: Quantity * yield

When linked price is reached:

• Vault subscribers receive linked token (WETH) at the Linked Price based on their deposits, plus yields in the linked token (WETH).

• Vault Creator receives the Subscribers' Investment token (USDC) + investment token (USDC) that the creator initially deposited.

When linked price is not reached:

• Vault subscribers receives the Investment token (USDC) that was deposited initially + yield in the Investment token (USDC).

• The vault creator receives the linked token (WETH) that was deposited initially. The investment token (USDC) that the creator deposited is paid out in yields to the subscribers.

Simplified example: WETH-USDC Sell High

Direction	Investment Token	Linked Token
Sell High	WETH	USDC

In a Sell High vault:

• The Vault Creator sets a maximum quantity of the investment Token (WETH) they are willing to buy at the Linked Price.

• Subscribers deposit the investment token (WETH) into the vault for a chance to sell it for the linked Token (USDC) at the Linked Price.

• The Vault Creator also deposits investment tokens (WETH) to fund yields if the Linked Price is not reached.

Here is the deposit formula for creating a Sell High vault:

Investment token: Quantity * yield

Linked token: Quantity * LinkedPrice * (1 +yield)

When linked price is reached:

• Vault subscribers receives the linked token (USDC) + yields in the linked token (USDC).

• The vault creator receives the subscriber’s investment token (WETH) at the linked price + investment token (USDC) that the creator initially deposited.

When linked price is not reached:

• The subscriber receives the investment token (WETH) that was deposited initially + the yield in the investment token (WETH).

• The vault creator receives the linked token (USDC) that was deposited initially. The investment token (WETH) that the creator deposited is paid out in yields to the subscribers.