Exiting

Exit

Users can exit a vault at any time, either before or after their debt matures. If the user exits before the maturity of their debt, Notional will redeem the user's vault shares, pay off their debt by lending to the specified liquidity pool at the current market rate, and return the excess capital to the user.

If the user waits until after maturity, their position will be settled for them. This involves their vault shares being redeemed and used to pay off their debt as part of the vault-wide settlement process. The capital that remains after the user pays their debts will stay invested in the vault strategy on an un-levered basis and the user can re-lever or withdraw that capital as they please.

Example Walkthrough

Here is the flow of funds when a user makes a withdrawal request. ETH is taken as an example for explanation.

1. Notional tracks the user account by querying the address info. When a user makes a withdrawal request, Notional looks up the user's portfolio which consists of vault shares (reflecting the investment position) and -ve fCash (reflecting the borrowed funds).

1. Notional redeems the vault shares for the user.

1. Redeeming vault shares would grant tokens based on the strategy in use (ETH is taken as an example). The token received by the Notional account would include the principal, borrowed funds, interest and the remaining will be the yields.

1. Notional account will now convert the tokens received from the vault to cTokens (cETH here), this is done to repay the loan by balancing the -ve fETH in the portfolio.

1. +fETH is required as a repayment of the borrowed funds + interest. Naturally, the cETH spent to buy +fETH equals the borrowed funds + interest. Thus, an adequate amount of cETH is swapped for +50 fETH. Here the exchange rate between cETH/fETH will be based on the current interest rate and the time left to maturity for that particular fETH.

1. Surplus ETH is sent back to the user.