ETH Elephant
Product Details & Payoff Scenarios
Deposit ETH and earn a high fixed yield.
Strategic Use Cases
You hold ETH and want to maximize yield on your holdings
You want to earn yield in ETH
You are comfortable selling your ETH for USDC at a profit if the market conditions are favorable (+10%)
Payoff Scenarios
For each scenario below, assume the following:
100 ETH investment in the 'ETH Elephant' Vault
ETH Elephant terms:
Investment duration: 27-day
Underlying asset = ETH
Strike price = 110%
APY = 25% (~2% per 27-day vault)
ETH price on Day 1 = $1620
Scenario 1: No Currency Conversion - Deposit ETH, Receive ETH
Example Scenario: ETH price movements during 27 day period
What happens in this scenario?
TLDR: deposit ETH, receive ETH
ETH price on Day 1 is $1620 and ends on Day 27 at $1620 which is below the strike price of $1800 (110% of Day 1 price)
Thus the vault trade expires and no currency conversion occurs. The full principal that was deposited by the user is returned (100 ETH). The user earns 2% yield paid in ETH (same currency as deposit)
Deposit and yield are automatically reinvested for compounding returns into a new 27-day vault
What is the payoff for the investor?
Initial deposit = 100 ETH
Deposit returned = 100 ETH
Yield earned = 2 ETH
APY = 25%, single 27-day vault yield = ~2%
Total payoff = 102 ETH after 27 days (deposit + yield)
Scenario 2: Currency Conversion - Deposit ETH, Receive USDC
Example Scenario: ETH price movements during 27 day period
What happens in this scenario?
TLDR: deposit ETH, receive USDC
ETH price starts at $1620 and ends above the strike price of $1800 (110% of Day 1 price) at expiry. This results in a 'conversion'.
A conversion occurs, whereby the deposited ETH is automatically sold for USDC at a 10% profit (at the 'strike price').
The user also earns 2% yield, which is paid in the same currency (USDC).
What is the payoff for the investor?
Initial deposit = 100 ETH
Asset value = $162,000 @$1620 ETH price
Deposit returned = $180,000 USDC
100 ETH sold for +10% profit @$1800
Yield earned = $3,600 USDC
100 ETH * 2% yield = 2 ETH sold @$1800
Total payoff = $183,600 USDC (+7.4% ROI) in 27 days
Scenario 3: Price Moves Above Strike During Trade
Example Scenario: ETH price movements during 27 day period
What happens in this scenario?
TLDR: deposit ETH, receive ETH
ETH price starts at $1620 and moves above the strike price ($1800) on day 10. However, the price at expiry ends below the strike price.
No conversion occurs because the payoff is calculated based on the prices at expiry of the 27-day vault.
The full principal that was deposited by the user is returned to them (100 ETH). The user also earns ~2% yield, which is paid in the deposit currency (ETH).
Deposit and yield are automatically reinvested for compounding returns into a new 27-day vault
What is the payoff for the investor?
Initial deposit = 100 ETH
Deposit returned = 100 ETH
Yield earned = 2 ETH
APY = 25%, single 27-day vault yield = ~2%
Total payoff = 102 ETH after 27 days (deposit + yield)
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