USDT Dragon
Product Details & Payoff Scenarios
Last updated
Product Details & Payoff Scenarios
Last updated
Deposit USDT and earn a high fixed yield.
You’re holding USDT and looking to accumulate ETH
You want to earn yield in USDT
You’re comfortable buying ETH for a discount + yield when market conditions are favorable (-5%)
Note: The USDT Dragon product tracks the ETH/USDT price.
For each scenario below, assume the following:
$100K USDT investment in the 'USDT Dragon' Vault
USDT Dragon terms:
Investment duration: 27-day
Underlying asset = USDT
Strike price = 95%
APY = 50% (4% per 27-day vault)
ETH price on Day 1 = $1890
Example Scenario: ETH price movements during 27 day period
What happens in this scenario?
TLDR: deposit USDT, receive USDT
ETH price on Day 1 is $1890 and ends on Day 27 at $1920 which is above the strike price of $1800 (95% 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 ($100K USDT). The user earns 4% yield paid in USDT (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 = $100K USDT
Deposit returned = $100K USDT
Yield earned = $4,000 USDT
APY = 50%, single 27-day vault yield = ~4%
Total payoff = $104K USDT after 27 days (deposit + yield)
Example Scenario: ETH price movements during 27 day period
What happens in this scenario?
TLDR: deposit USDT, receive ETH
ETH price on Day 1 is $1890, and on Day 27 ends below the strike price of $1800 (95% of Day 1 price). This results in a currency conversion.
Upon conversion, ETH is purchased at a 5% discount to Day 1 prices at the strike price.
The user also earns the 4% yield which is paid in ETH, effectively increasing the net discount to 9% for acquiring ETH
What is the payoff for the investor?
Initial deposit = $100,000 USDT
Deposit returned = 55.6 ETH
$100K USDT buys 55.6 ETH @$1800 (5% discount to Day 1 price)
Yield earned = 2.2 ETH
4% yield * $100K USDT deposit used to buy more ETH @$1800
Total payoff = 57.8 ETH in 27 days
Net price discount on ETH = 9%
Average ETH acquisition price = $1730 ($100K USDT ÷ 57.8 ETH) vs. $1890 Day 1 price
Example Scenario: ETH price movements during 27 day period
What happens in this scenario?
TLDR: deposit USDT, receive USDT
ETH price on Day 1 is $1890 and on Day 10 moves below the strike price of $1800 (95% of Day 1 price). However this doesn't matter because currency conversion is only evaluated on Day 27. In this example, ETH rallies by Day 27 to end at $1920 which is above the strike price. Thus the vault trade expires and no currency conversion occurs.
The full principal that was deposited by the user is returned ($100K USDT). The user earns 4% yield paid in USDT (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 = $100K USDT
Deposit returned = $100K USDT
Yield earned = $4,000 USDT
APY = 50%, single 27-day vault yield = ~4%
Total payoff = $104K USDT after 27 days (deposit + yield)