WBTC Dragon
Product Details & Payoff Scenarios
Last updated
Product Details & Payoff Scenarios
Last updated
Deposit WBTC and earn a high fixed yield.
You hold WBTC and want to maximize yield on your holdings
You want to earn yield in WBTC
You are comfortable selling your WBTC for USDC at a profit if the market conditions are favorable (+5%)
For each scenario below, assume the following:
Investor deposits 10 WBTC into the 'WBTC Dragon' Vault
WBTC Dragon terms:
Investment duration: 27-day
Underlying asset = WBTC
Strike price = 105%
APY = 50% (~4% yield per 27-day vault)
WBTC price on Day 1 = $40,000
Example scenario: WBTC price movements during a 27 day period
What happens in this scenario?
TLDR: deposit WBTC, receive WBTC
WBTC price on Day 1 is $40,000 and ends on Day 27 at $38,000 which is below the strike price of $42,000 (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 (10 WBTC). The user earns ~4% yield paid in WBTC (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 = 10 WBTC
Deposit returned = 10 WBTC
Yield earned = 0.4 WBTC
APY = 50%, single 27-day vault yield = ~4%
Total payoff = 10.4 WBTC after 27 days (deposit + yield)
Example scenario: WBTC price movements during a 27 day period
What happens in this scenario?
TLDR: deposit WBTC, receive USDC
WBTC price starts at $40,000 and upon expiry ends above the strike price of $42,000 (105% of Day 1 price). This results in a 'conversion'.
A conversion occurs, whereby the deposited WBTC is automatically sold for USDC at a 5% profit (at the 'strike price').
The user also earns ~4% yield, which is paid in the same currency (USDC).
What is the payoff for the investor?
Initial deposit = 10 WBTC
Asset value = $400,000 @$40,000 WBTC price
Deposit returned = $420,000 USDC
10 WBTC sold for +5% profit @$42,000
Yield earned = $16,800 USDC
10 WBTC * 4% yield = 0.4 WBTC earned and sold @$42,000
Total payoff = $436,800 USDC (+9.2% ROI) in 27 days
Example scenario: WBTC price movements during a 27 day period
What happens in this scenario?
TLDR: deposit WBTC, receive WBTC
WBTC price starts at $40,000 and moves above the strike price ($42,000) 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 (10 WBTC). The user also earns ~4% yield, which is paid in the deposit currency (WBTC).
Deposit and yield are automatically reinvested for compounding returns into a new 27-day vault
What is the payoff for the investor?
Initial deposit = 10 WBTC
Deposit returned = 10 WBTC
Yield earned = 0.4 WBTC
APY = 50%, single 27-day vault yield = ~4%
Total payoff = 10.4 WBTC after 27 days (deposit + yield)
