stETH Dragon
Product Details & Payoff Scenarios
Last updated
Product Details & Payoff Scenarios
Last updated
Deposit stETH and earn a high fixed yield.
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%)
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
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)
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
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)