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  1. Mechanism

Convertible Notes

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Last updated 5 days ago

When USDC is deposited to stables USD, it goes a metavault with the LP tokens in it (PT-USD + SY-USD), as more assets enter the vault, they are converted to the underlying LP tokens by minting SY-USD [SY-USD = PT-USD + YT-USD].

In a scenario where there's additional liquidity in the underlying AMM, the extra YT-USD's get swapped to PT-USD which gets added to the LP in the vault and if not, the YT-USD stays as is inside the metavault.

YT-USD sits in the underlying lp pool itself (variable rate yield strategy) which creates a flywheel effect to drive demand on the notes. As the PT-USD discount decreases, yield on the variable rate strategy goes up, and as people deposit into the variable rate vault, the discount on pt increases offering better yield on fixed rate notes.

High Level Design: Lucidly USD Basic (lUSDb) - ERC4626 Vault deploying USD deposited across underlying stablecoin yield strategies.

StableUSD is an index of - (USDC, lUSDb, lUSDb LPTs)

Pool - SY-lusdb + PT-lusdb

Vault strategy for buying PTs:

  1. Deposit asset X (USDC)

  2. Swap USDC to lUSDb

  3. Wrap lUSDb to SY-lUSDb

  4. Mint PT-lUSDb + YT-lUSDb

  5. Sell YT-lUSDb into the pool for PT-lUSDb.

  6. Add PT-lUSDb into Pool Liquidity.