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%)
Payoff Scenarios
For each scenario below, assume the following:
100 stETH investment in the 'stETH Dragon' Vault
stETH Dragon terms:
Investment duration: 27-day
Underlying asset = wstETH
Strike price = 105%
APY = 25% (~2% per 27-day vault)
wstETH price on Day 1 = $1710
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)
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)
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