Capital Deposit
MetaStreet Capital Vaults provide Capital Depositors a chance to earn yield that varies based on risk appetite. Capital deposited into vaults is used to buy Promissory Notes from Note Originators who have created these Notes on P2P Marketplaces (ie, NFTfi, Arcade, PWN, etc).
Capital Vaults are bifurcated by asset type (ex: Avatar, P2E, Metaverse Land, Artwork, etc) and currency type (ex: WETH, DAI, etc). At launch, only the Avatar asset type will be supported, but additional asset types will be covered shortly thereafter. Both WETH and DAI will be supported at launch.
NOTE: All deposits are priced based on a vault share's "estimated value", while redemptions or withdrawals are priced based on a vault share's "realized value". The estimated value includes a real-time proration of returns from currently held notes, ensuring depositors with capital at risk during various points of loan maturities experience fair proration of returns. The realized value only reflects changes in value upon note maturity. As such, realized value will typically be less than estimated value at any given time. This means that upon depositing, depositors will see a slightly lower redemption price for their shares than what was deposited, however this redemption price will increase in value as the outstanding notes mature.
After deciding to deposit capital into a vault, the user needs to also choose how to allocate capital between Junior and Senior Positions.
The Junior and Senior Positions deal with how both the interest income and default risk are allocated amongst users. The Senior Position earns a fixed interest rate that is intentionally lower than the interest rates being earned by the Capital Vault. In return for accepting this lower return, the Senior Position gets "protected" by the Junior Position. If a Promissory Note experiences Loss Given Default, the Junior Position must bear this loss before the Senior Position does. In return for this additional risk, the Junior Position earns all of the upside generated by the Capital Vault that the Senior Position cannot access.
When depositing into a Capital Vault, the user must decide what kind of risk/return profile is optimal for himself. MetaStreet will provide analytics to help inform this decision.
After choosing positions, the user decides on a deposit amount and then clicks on "Deposit", then confirms the transaction in wallet (2-steps).
After the transaction has processed, there will be an Etherscan link showing the approved transaction. The user can then visit the "Portfolio" page to see his positions.
Withdrawing capital requires the vault to have liquid funds accessible. If liquid funds are not accessible in the vault (in other words, all of the capital has been deployed to buy Promissory Notes), users will see an "estimated redemption period" that indicates how long it will take to withdraw their funds based on the current Promissory Note maturity schedule.
Withdrawal will be instantaneous for all but the largest of Capital Depositors, or unique instances where 100% of the Vault is deployed.
If there is a redemption queue (meaning 100% of the vault is deployed), users can enter the queue and will then be able to withdraw as notes mature. Senior Positions will always be able to withdraw before Junior Positions in the queue.
Last modified 9mo ago