Deposit

In Vault, Users can deposit assets and expect additional profits through them. Vault allows individual deposits of desired assets as single liquidity among the allowed assets as part of an integrated liquidity pool. This enables convenient deposit of liquidity assets without the hassle of balancing two tokens in a 50:50 ratio, as required in traditional LP arrangements without uncomfortable procedure. By depositing assets, users contribute to the liquidity pool, which can then be utilized by various services, generating fees for liquidity usage and creating income.

Expectations

Asset deposits in Vault can serve three main purposes:

• Increasing the quantity or value of deposited assets through liquidity management
• Increasing the value of MECA's value as the protocol grows
• Staking MECA in farms for yield farming

Users can acquire MECA through determined by the deposit formula. Upon depositing assets, a certain amount of MECA is minted based on the deposited amount and the ratio of MECA already circulating in the market. However, the number of MECA obtainable for a specific asset deposit fluctuates dynamically due to the factors influencing the exchange rate, requiring a clear understanding of the mechanics behind the deposit conversion formula.

Formula

Factors

The deposit conversion formula is influenced by five diverse factors, each dynamically changing depending on the context of the asset being deposited. Understanding the implications of each factor and considering favorable moments for their application is crucial when depositing assets into Vault.

$a$ = The 'amount' of the token to be deposited by the user.

$h$ = The 'holding' amount of the token in the vault.

$n$ = The 'need' amount of the token in the vault.

$w$ = The 'weight' value of token in the vault.

$g$ = $(h + n)$: The 'goal' amount that the token has to be held in the vault.

Calculation

First, calculate the minted MECA quantity from the deposit amount. Basically, this is done by calculating how much MECA value one token can currently be recognized as based on the ratio between the amount of money the asset exists in the vault and the quantity of MECA minted through the asset and already circulating in the market. This calculation assesses how much MECA value one unit of the current token can accrue, thus determining the quantity of new MECA that can be minted.

Add the amount of tokens currently held by the vault and the amount to be deposited to obtain the total amount of tokens that will be applied during the deposit process. Subsequently, the comparative value is calculated by dividing the quantity of the token by the weight value, representing the quantity of MECA circulating in the market through the respective token. Through this, the deposited amount is converted into MECA value, and based on this, the quantity of MECA that needs to be newly minted is calculated.

$$quantity = \left(\frac{w}{h + a} \cdot a \right)$$

Based on the quantity derived from the above formula, the weight is calculated by examining how the current deposit attempt changes the vault's holding amount relative to the target amount it should hold for the respective asset. For example, if the vault holds 1000 units of the asset and the need value is -50, the 'g' value for the current deposit transaction becomes 1000 + (-50), resulting in 950. In this case, with the vault's holding at 1000 units and the deposit amount at 100, the denominator becomes 1000 + 100, which is 1100.

$$MecaEarn = quantity \cdot \frac{g = (h - n)}{h + a}$$

In essence, the vault is in a situation where it deems the token to be already sufficient and considers 50 units as unnecessary. However, due to the increase in holdings resulting from the deposit, the situation is changing. Hence, based on the ratio of 950 to 1100, the attempt to deposit is measured against how far it deviates from the target amount the vault should hold for that particular token. In this calculation, as the deposit moves further away from the target, disincentives are applied proportionally, resulting in a reduction in the final amount of MECA the user ultimately receives.

The finally determined quantity of MECA to be minted represents the amount of MECA the user will receive after the deposit. Additionally, this quantity accumulates back into the weight value (weight + MecaEarn), influencing subsequent deposit.

Dynamics

As the deposit process repeats and the Need value continues to decrease, reaching larger negative values, the quantity of MECA that can be minted upon deposit for the corresponding token gradually approaches 0. Essentially, the accumulation of the token through deposits can be seen as selling pressure, resulting in a continuous decrease in the MECA conversion value of the token. So, while the weight value increases slowly, the vault's holdings of the token continue to rise, causing the minted quantity of MECA to gradually decrease with each deposit attempt. This can also be understood as a limited maximum weight value that a particular token can reach if there are no changes in other factors.

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Consequently, if there's a decline in market valuation or an increase in the external valuation of MECA, the amount of MECA earned will decrease. This can be understood by likening it to the mechanism of a Swap that using the CPMM(Constant Product Market Maker). Therefore, if there's substantial selling pressure due to a decrease in the value of a specific token, the token's value may plummet to 0. This implies that at a certain point, the number of MECA earned by depositing that token will not merely approach zero but will effectively be zero. In such a scenario, the vault will cease to deposit that token.

Chance

The fluctuation of the Need value during the deposit process is not always consistent. Therefore, by depositing assets into the Vault, users can potentially earn incentives based on the changing weight, which is influenced by factors such as fluctuations in liquidity utilization by services from the Vault. For example, if there is high demand for a specific asset in the market, resulting in increased buying pressure and a decrease in the Vault's holdings of that asset through market activities, or if users anticipate that the value of the asset will appreciate more rapidly than MECA and consequently attempt to burn MECA and withdraw the asset directly from the Vault, the Need value may transition from negative to positive.

For instance, if the Vault holds 1000 units of a particular asset and the Need value is 200, indicating a shortage of 200 units, this suggests that an additional 200 units of the asset need to be deposited. Consequently, the weight value for the current deposit attempt would be 1000 + 200, resulting in 1200. In this scenario, if a user deposits 100 units while the Vault holds 1000 units, the denominator becomes 1000 + 100, equating to 1100. Therefore, with a ratio of approximately 1.09, the user can gain an additional 9% of MECA as an incentive from the deposit.

Fees

The deposit fee is 1%, with half of this fee being credited to the user's credit score. Users pay a 1% fee for the MECA they will obtain through the deposit, with 50% of this fee reflected in their credit score. The credit score can be utilized later for unsecured loans or others, the same as the actual MECA value.

Credit

When depositing tokens into Vault, users can earn a credit score of 2. Deposits are encouraged actions as they contribute positively to the overall ecosystem. Therefore, when making a deposit, a cashback of half of the 1% transaction fee will be credited to credit points.