WBTC Elephant
Product Details & Payoff Scenarios
Deposit WBTC and earn a high fixed yield.
Strategic Use Cases
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 (+10%)
Payoff Scenarios
For each scenario below, assume the following:
10 WBTC investment in the 'WBTC Elephant' Vault
WBTC Elephant terms:
Investment duration: 27-day
Underlying asset = WBTC
Strike price = 110%
APY = 25% (~2% per 27-day vault)
WBTC price on Day 1 = $38,182
Scenario 1: No Currency Conversion - Deposit WBTC, Receive WBTC
Example Scenario: WBTC price movements during 27 day period
What happens in this scenario?
TLDR: deposit WBTC, receive WBTC
WBTC price on Day 1 is $38,182 and ends on Day 27 at $38,100 which is below the strike price of $42,000 (110% 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 2% 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 = 0.2 WBTC
APY = 25%, single 27-day vault yield = ~2%
Total payoff = 10.2 WBTC after 27 days (deposit + yield)
Scenario 2: Currency Conversion - Deposit WBTC, Receive USDC
Example Scenario: WBTC price movements during 27 day period
What happens in this scenario?
TLDR: deposit WBTC, receive USDC
WBTC price starts at $38,182 and ends above the strike price of $42,000 (110% of Day 1 price) at expiry. This results in a 'conversion'.
A conversion occurs, whereby the deposited WBTC is automatically sold for USDC at a 10% 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 = 10 WBTC
Asset value = $381,820 @$38,182 WBTC price
Deposit returned = $420,000 USDC
10 WBTC sold for +10% profit @$42,000
Yield earned = $8,400 USDC
10 WBTC * 2% yield = 0.2 WBTC sold @$42,000
Total payoff = $428,400 USDC (+12.2% ROI) in 27 days
Scenario 3: Price Moves Above Strike During Trade
Example Scenario: WBTC price movements during 27 day period
What happens in this scenario?
TLDR: deposit WBTC, receive WBTC
WBTC price starts at $38,182 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 ~2% 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 = 0.2 WBTC
APY = 25%, single 27-day vault yield = ~2%
Total payoff = 10.2 WBTC after 27 days (deposit + yield)
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