WBTC Elephant
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 (+10%)
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
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)
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
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)
