Entering

Entry

To enter a vault, a user will select the maturity that they want to borrow from, the amount they want to borrow, and the amount they want to deposit.

Notional will take the user's deposit, borrow the extra cash from the specified liquidity pool, and deposit the total funds in the vault. The Notional vault controller will record the user's debt and their share of the assets in the vault.

Example Walkthrough

Here is the flow of funds when a user makes a deposit request for 10 ETH in a leveraged strategy vault. ETH is taken as an example for explanation.

1. The user is asked to select the maturity, the leverage multiple and the deposit amount.

1. A similar mechanism to that of borrowing works in the 2nd step. A pair of +fETH and -fETH is minted. The quantity of this mint depends on the deposit amount and the leverage multiple. In our case, with a leverage multiple of 5x and a deposit of 10 ETH, 50 +fETH and 50 -fETH will be minted.

1. The +fETH is used to borrow funds from the fETH 3Month liquidity pool.

1. The tokens that are received are in cETH and the exchange rate between cETH and fETH depends on the interest rates and the time left to maturity.

1. The cETH is converted to ETH as the strategy uses ETH as an input token.

1. ETH accumulated from the initial deposit and the borrowing is invested in the leveraged vault strategy.

1. The strategy vault provides "vault shares" (receipt token) that represent your investment portfolio.