Lock or float
Put 1 cUSDC in the vault and you hold a share worth 1 cUSDC plus whatever yield accrues by maturity. The yield manager splits that share into two tokens.
The 1 cUSDC at maturity, nothing else. Buy it below face today and you have locked a fixed return. It does not care what the vault does until maturity.
All the yield that share earns between now and maturity. Every hourly tick accrues to it. A small slice of value that captures all the variation, so it swings hard.
Two rates
The realised rate is what the vault actually pays, hour by hour: the thermometer. The implied rateis what the AMM's PT price assumes for the time left: the forecast. Selling PT makes it cheaper and pushes the implied rate up; buying PT pulls it down. The vault's hourly tick never moves the implied rate by itself. Traders do, when they react to it.
| Realised over the round | Hold vault | PT at 8% implied | YT at 8% implied |
|---|---|---|---|
| 6% | +0.23% | +0.31% | ≈ −25% |
| 8% | +0.31% | +0.31% | ≈ 0% |
| 10% | +0.38% | +0.31% | ≈ +25% |
Two weeks, 1,000 cUSDC. Scoring measures you against the first column. Lock means betting realised falls short of implied; float means betting it exceeds it.
Why the rate is a judgement call, not a coin flip
Picture the APR as a ball on a string pegged at the long-run mean. Every hour it gets a random nudge, and the string tugs it back by a fixed fraction of the distance. Far from the mean, the pull dominates. Near it, the nudges do. When the APR has spiked, you know which way the string is pulling.
The seed is secret during a round and revealed at the end, so nobody can predict the nudges but everyone can check them afterwards. Verify a round →