mUSDC Vault - Yield
Last updated
Last updated
muSDC Vault is like a piggy bank for trading. It's a special place where you can put your USDC ) and earn a little extra interest while you trade on the platform. Here's how it works:
When you make a profit from trading, your winnings come from the vault.
But if things don't go your way and you make a loss, the vault will cover it for you. So don't worry, you can't go into debt from trading.
In exchange for providing this service, the vault receives a portion of the trading fees.
These fees are proportionally split among mUSDC holders, incentivizing them to keep their mUSDC in the vault. The collateralization of the vault depends on the overall profit and loss of traders using the platform. As long as the fees earned are greater than the losses paid out, muSDC holders can expect to earn a positive return.
The protocol has various risk management measures in place to ensure the safety of mUSDC held in the vault.
When overall PnL is negative, the vault starts to create a buffer with those funds, further protecting stakers' funds and the protocol from future PnL abnormalities.
To better approximate real collateralization ratio, and to minimize risks for the protocol (including stakers), the vault follows an epoch system for capturing snapshots of open PnL. Open PnL represents the aggregate PnL of all open trades at the time of the snapshot.
mUSDC is an ERC-20 representing ownership of the underlying USDC asset. It follows an exchange rate model (similar to Compound's cTokens) where the price of mUSDC to USDC changes in real-time from two variables: accumulated fees and trader PnL (both open and closed).
mUSDC = 1 + accRewardsPerToken — Math.max(0, accPnlPerTokenUsed)
accRewardsPerToken: accumulator value representing how many fees a single mUSDC has accrued. This value always increases over time.
accPnlPerTokenUsed: a snapshotted accumulator value of trader PnL from all closed trades and a snapshot of open trades from the end of the previous epoch. This value changes every epoch and can move in either direction.
For a more detailed overview of the vault, please see our Medium post: