Payout And Qualified Security Incidents

When the depositor’s staked token in the Optymize Vault suffers a Security Incident accompanied with the price of that token dropping by more than a fixed percentage e.g. 50%, 75%, etc. (could also vary between different Optymize Vaults) the Security Incident will be considered qualified (“Qualified Security Incident” or “QSI”) and the depositor will receive a payout to cover her / his losses (“Payout”). Payout comprises of tokens in the Optymize Vault that did not experience a Security Incident. We aim to open the Optymize Vault on the day of the QSI and settle the Payout to depositors as soon as possible. Assume the Optymize Vault has [ETH, AVAX, MATIC, BNB and FTM] and the investment strategy is [Yearn / Convex]. If ETH experienced a QSI, ETH will be exchanged for AVAX, MATIC, BNB and FTM in the Optymize Vault. Holder of ETH will receive a basket of AVAX, MATIC, BNB and FTM after a QSI occurred and confirmed. When the depositor stakes her / his token into the Optymize Vault, Optymize will confirm the number of other tokens she / he will receive AND give, should there be a Payout. Given every depositor comes in at different times, the number of token units she/he receives and gives would dynamically reflect the prevailing token prices.

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• Illustration of Payout after Qualified Security Incident for ETH

  From depositor of ETH’s perspective

  

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In the above example, the ETH depositor has effectively swapped her / his ETH for AVAX, MATIC, BNB and FTM after the QSI occurred. The ETH depositor’s overall loss following the QSI is only US$20 rather than US$75 (75% loss) to total loss of US$100. The loss was shared by other depositors that have staked AVAX, MATIC, BNB and FTM into the Optymize Vault.

Depositors of AVAX, MATIC, BNB and FTM will swap a portion of their tokens for some of ETH. In the above example, AVAX, MATIC, BNB and FTM holders would each incur a loss of US$20 if ETH’s value ultimately drops to $0 (which might not be the case at the end). As we create Optymize Vault that allows staking of more than 5 different tokens, the loss will be shared amongst more tokens, significantly reducing the potential loss incurred by any one depositor.