What are lvTokens?
When a user deposits assets into Steadefi's lending vaults, lvTokens (Lending Vault Tokens) are used to monitor the funds they have deposited as well as any interest earned.
When a user supplies funds to the lending vault, they are issued a corresponding balance in lvTokens. This balance of the lvTokens is proportional to the stake they have in the lending vault, which accumulates interest on every block.
Each lending vault on Steadefi has its lvToken; for example, if a user lends AVAX to the protocol, they will receive a corresponding balance of lvAVAX-AVAX-USDC.
Do not burn your lvTokens! They are your deposits in the lending pool.
How do lvTokens earn interest?
Each lending deposit vault earns interest. By holding the lvTokens, you'll earn the interest.
The value gained by these lvTokens is shown in their exchange rate. This value increases with every block and it becomes convertible into a larger amount of its underlying asset, even while the number of lvTokens in your wallet stays the same.
Each deposit vault has its own utilization which will also reflect how much the corresponding lvTokens will appreciate over time.
The longer a user holds lvTokens, the higher the value of those tokens appreciates. It is not necessary to stake lvTokens to enjoy this price appreciation.
Do I need to calculate the lvTokens exchange rate?
No, you can view the exchange rates on our Steadefi Lending Vaults details page.
The exchange rate of a an lvTokens to a Token in a lending vault is calculated as such:
When a lending vault first launches, the lvTokens exchange rate begins at 1:1.
As the assets in the lending vault gets borrowed, the lvTokens exchange rate would begin to increase, as the lending vault earns interest in the form of tokens.
lvTokens Exchange Rate Example
- You supply 1,000.00 AVAX in our AVAX Lending Vault which initially has 0 AVAX. Each ibAVAX is thus worth exactly 1.00 AVAX. You receive 1,000.00 ibAVAX (1,000 / 1).
- Over time, as our strategy vaults borrow AVAX for leveraged positions, the interest (in AVAX) is paid into the AVAX Lending Vault. Now each ibAVAX is worth > ~1.00 AVAX. If we assume that the interest paid so far is about 50.00 AVAX, this means that each ibAVAX is worth 1050.00 AVAX / 1000.00 ibAVAX = 1.05 AVAX.
- At this point, you decide to redeem your ibAVAX from the vault, an action which automatically converts it back to AVAX based on the current exchange rate. Since the exchange rate is 1.00 ibAVAX to 1.05 AVAX, you will receive 1,050.00 AVAX (and your ibAVAX amount is now 0).
- Alternatively, you could redeem a portion of your ibAVAX in order to regain your original 1,000 AVAX (effectively redeeming 952.38 ibAVAX) and keep the extra 47.61 ibAVAX in your wallet for continuing interest accumulation.