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Pay-in-Advance Model

The Pay-in-Advance Lending Pools will be aggregated pools based on the underlying of the LPs. To understand the unique appeal of Vaultka's lending mechanism, it's pivotal to focus on three defining features:
  • ​Performance Correlation: The rewards for the lending pool derive directly from the performance of its linked vault.
  • ​Predictable Rewards: Lenders can anticipate the forthcoming rewards with certainty.
  • ​Protected Minimum: The rewards lenders receive will never fall below a defined expected amount and can only increase.

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Detailed Breakdown

Performance Correlation - Bonus Reward:

  • Traditional systems with fixed borrowing costs often do not account for variable asset performance. With Vaultka, a better-performing linked vault translates to higher rewards for lenders.
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BonusReward=max(0,Rw−BaseReward±RedistributorBalanceAdjustment)\small Bonus Reward = max(0, Rw-Base Reward ±Redistributor Balance Adjustment)
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where
RwRw
 denotes the total rewards from all positions in the past week

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Predictable Rewards - Base Reward:

  • Asset performance can be volatile. The pay-in-advance model solidifies upcoming rewards before they materialize, distributing them to lenders on an hourly basis.
  • Lenders benefit from the upside without the associated risks of underperformance. Vault users assume the risks, ensuring lenders always receive positive rewards.
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BaseReward=Rq×(1−SD)90×7Base Reward = \frac {Rq×(1-SD)}{90} × 7
​
where
RqRq
 denotes the total rewards from all positions in the previous quarter SD represents the daily standard deviation in percentage
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Reward Structure

TotalReward=BaseReward+BonusRewardTotal Reward = BaseReward + Bonus Reward
  • If the actual reward from the previous week exceeds the base reward, the surplus (after adjusting for any credits/debits in the Vaultka redistributor) is shared as a bonus. (Scenario 1)
  • Should the past week's rewards be lower than the base reward, the lending pool still receives the base reward. Any shortfall is recorded against the Vaultka redistributor balance. (Scenario 2)
  • The total Reward will be adjusted based on the balance of the redistributor (scenario 3)
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Lending Pools in Pay-in-advance model

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Formula

  • Annotations:
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RqRq
 denotes the total rewards from all positions in the previous quarter
​
RwRw
 denotes the total rewards from all positions in the past week
​
SDSD
 represents the daily standard deviation in percentage
​
TVLTVL
 stands for the total value locked from realized positions
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ΔRu\Delta Ru
signifies the change in unrealized positions
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∑\sum
 is the mathematical representation for summation
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  • APR:
BaseAPR=BaseRewardTVLBaseAPR = \frac {BaseReward} {TVL}
BonusAPR=BonusRewardTVLBonus APR = \frac {Bonus Reward} {TVL}
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  • Determining Actual Reward:
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ActualReward=∑TotalRewardSplitFromRealizedPositionsInLinkedVaultsOverThePastWeek\small ActualReward=\sum TotalRewardSplitFromRealizedPositionsInLinkedVaultsOverThePastWeek
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Last modified 2mo ago