What are Strategy Vault (sv)Tokens?
svTokens are essentially a “deposit receipt”.
When a user opens a position in one of our strategy vaults, the "strategy vault tokens" are used to represent the user’s “share” of that vault.
Each strategy vault has its own svToken; for example, if a user deposits in the
3X Neutral Yield Farm AVAX-USDC TraderJoe vault, they will receive a corresponding balance of 3N-AVAXUSDC-TJ.The svToken symbol is assigned as such:
[Target Leverage][Delta Strategy]-[Underlying Assets]-[Yield Sources]
Do not burn your svTokens! They are your position in the vault!
How do svTokens change in value?
svTokens do not gain their value entirely from yields earned. Instead, they represent the total value of your vault position, which may fluctuate over time.
If a strategy vault generates profit, the value of its svToken will increase. If a strategy vault decreases in overall value, the value of its svToken will decrease.
You do not need to stake your svTokens to enjoy the long-term value appreciation.
Do I need to calculate the svToken exchange rate?
No, you can view the exchange rates on the Strategy Vaults page.
The exchange rate of a vault’s svToken to value in a vault is calculated as such:
Where:
When a vault first launches, the svToken to vault’s equity value’s exchange rate begins at 1:1.
As the value in the vault changes over time, the svToken exchange ratio will increase or decrease depending on how well the vault’s strategy is performing.
svToken Exchange Ratio Example
- You supply 100 AVAX in our 3x Neutral AVAX-USDC Vault which initially has 0 AVAX and 0 USDC. Assuming 1 AVAX = 100 USDC, this vault’s strategy will split your 100 AVAX (worth 10,000 USDC) into 50 AVAX and 5000 USDC. Each 3N-AVAX-USDC-TJ is worth exactly 1 USDC and you receive 10,000 3N-AVAX-USDC-TJ.
- Over time, as the vault performs well and earns more yield than interest paid, the value of the vault rises to 11,000 USDC. The exchange rate of 1 3N-AVAX-USDC-TJ is thus 11,000 USDC / 10,000 3N-AVAX-USDC-TJ (total supply of 3N-AVAX-USDC-TJ) = 1.1
- At this point, you decide to redeem your 3NYF-AVAX-USDC-TJ from the vault. Since the exchange rate of 3N-AVAX-USDC-TJ is now 1.1 USDC, you will receive 11,000 USDC (and your 3N-AVAX-USDC-TJ amount is now 0). Note that you can also choose to redeem your assets in AVAX and/or USDC.
- Alternatively, you could redeem a portion of your 3N-AVAX-USDC-TJ in order to regain your original 10,000 investment (effectively redeeming about 9.091 3N-AVAX-USDC-TJ) and keep the extra 0.909 3N-AVAX-USDC-TJ in your wallet for continuing vault strategy execution/investment.
Note that this is an extremely simple example that does not take into account slippages for swaps, interest from debt borrowing or price movements of the volatile asset.