Vault

Vaults are constructed using the ERC4626 tokenized vault standard. Within a Vault, one or more Strategies are implemented to deploy assets into DeFi protocols to generate profit. The Vault faciliates the creation and redemption of dETPs in response to market demand, as well as providing liquidity on decentralized exchanges within a predefined range tracking the Index Price. The underlying assets managed by the Vault can be tracked in real-time on DELTAFi's dashboard further enhancing transparency.

1) Creation and redemption of dETPs

The Vault handles the creation and redemption of dETPs based on deposits and withdrawals of underlying tokens. This process, executed at the Index Price, adjusts dETP supply in response to market demand with Automated Liquidity Provision, through which a portion of unbacked dETPs is created to provide liquidity on decentralized exchanges (DEXs). These unbacked dETPs are gradually settled during rebalancing.

2) Index Price

The Index Price is computed by dividing the total number of underlying tokens by outstanding dETPs. Only dETPs held by users are considered "outstanding" for this calculation, excluding those held by the Vault for liquidity provision.

3) Automated Liquidity Provision (ALP)

The Vault utilizes a portion of underlying tokens and unbacked dETPs to provide liquidity on DEXs. CLAMMs are used to ensure viable liquidity is provided for both the underlying token and its dETP within a dynamically adjusted range that tracks Index Price. Profits generated from liquidity provision are directed to the Vault, enhancing the value of dETPs as trading volume increases.

4) Rebalancing

Assets within the Vault are allocated into three categories: Reserve, Liquidity, and Strategy.

• Reserve: Underlying tokens set aside to address liquidity shortages in the market, especially during large-scale sell-offs of dETPs

• Liquidity: Underlying tokens and dETP tokens provided as liquidity in CLAMM pools to facilitate trading

• Strategy: Underlying tokens allocated to the Strategy for profit generation

The Vault maintains an optimal ratio among these categories to ensure optimized returns from the Strategy and sufficient liquidity for users. The current ratio is set at 10% reserve, 10% liquidity, and 80% strategy, subject to change depending on market circumstances.

5) Fees

Maximum of 1% per annum on outstanding dETPs may be charged on dETPs. Each dETPs are unique therefore will have different fees. During rebalancing, the appropriate amount of dETPs is inflated and sent to a designated Treasury address. However, ALL fees are exempt during growth phase and will later be imposed after announcement.

6) Circuit Breaker

Vault has an emergency feature that can halt Vault and freeze funds in case of a failure or an attack.