stETH Dragon

Product Details & Payoff Scenarios

Deposit stETH and earn a high fixed yield.

Strategic Use Cases

• You hold stETH and want to maximize yield on your holdings

• You want to earn yield in stETH

• You are comfortable selling your stETH for USDC at a profit if the market conditions are favorable (+5%)

Conversion likelihoods are based on backtesting data (Jan 2023 - Jan 2024)

Payoff Scenarios

For each scenario below, assume the following:

100 stETH investment in the 'stETH Dragon' Vault

stETH Dragon terms:

1. Investment duration: 27-day

2. Underlying asset = wstETH

3. Strike price = 105%

4. APY = 25% (~2% per 27-day vault)

5. wstETH price on Day 1 = $1710

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Scenario 1: No Currency Conversion - Deposit stETH, Receive stETH

Example Scenario: wstETH price movements during 27 day period

Note: wstETH is the linked underlying asset for all Cega stETH products. Learn more here

What happens in this scenario?

• TLDR: deposit stETH, receive stETH

• wstETH price on Day 1 is $1710 and ends on Day 27 at $1600 which is below the strike price of $1800 (105% 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 stETH). The user earns 2% yield paid in stETH (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 stETH

• Deposit returned = 100 stETH

• Yield earned = 2 stETH

  • APY = 25%, single 27-day vault yield = ~2%

• Total payoff = 102 stETH after 27 days (deposit + yield)

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Scenario 2: Currency Conversion - Deposit stETH, Receive USDC

Example Scenario: wstETH price movements during 27 day period

Note: wstETH is the linked underlying asset for all Cega stETH products. Learn more here

What happens in this scenario?

• TLDR: deposit stETH, receive USDC

• wstETH price starts at $1710 and ends above the strike price of $1800 (105% of Day 1 price) at expiry. This results in a 'conversion'.

• A conversion occurs, whereby the deposited stETH is automatically sold for USDC at a 5% 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 stETH

  • Asset value = $171,000 @$1710 wstETH price

• Deposit returned = $180,000 USDC

  • 100 stETH sold for +5% profit @$1800

• Yield earned = $3,600 USDC

  • 100 stETH * 2% yield = 2 stETH sold @$1800

• Total payoff = $183,600 USDC (+7.4% ROI) in 27 days

Scenario 3: Price Moves Above Strike During Trade

Example Scenario: wstETH price movements during 27 day period

Note: wstETH is the linked underlying asset for all Cega stETH products. Learn more here

What happens in this scenario?

• TLDR: deposit stETH, receive stETH

• wstETH price starts at $1710 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 stETH

• Deposit returned = 100 stETH

• Yield earned = 2 stETH

  • APY = 25%, single 27-day vault yield = ~2%

• Total payoff = 102 stETH after 27 days (deposit + yield)