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Vault-K-NO Lifecycle

The vault operates in continuous, overlapping cycles. A cycle begins when the operator deploys capital into a prediction market and ends when that market settles. Multiple cycles run simultaneously.

Slot States at Any Point in Time

At any given moment, the vault may have positions in various stages:

Stage Description
Newly entered Capital deployed, NO shares acquired, accrual has just begun
Mid-accrual Position accumulating modeled value toward $1.00
Near maturity Position approaching settlement date
Settling Market has resolved, settlement claim pending
Written off Market resolved YES — position worth zero

The Vault-K-NO Property

The vault never has a period where all capital is idle because maturities are staggered. With four slots and positions entered ~15 days apart, one slot settles approximately every 15 days. The vault always has 3–4 active positions accruing yield.

Ideal Stagger Pattern

Day   0: Slot 0 entered  ─────── matures Day  60
Day  15: Slot 1 entered       ─────── matures Day  75
Day  30: Slot 2 entered            ─────── matures Day  90
Day  45: Slot 3 entered                 ─────── matures Day 105

Day  60: Slot 0 settles, operator redeploys → matures Day 120
Day  75: Slot 1 settles, operator redeploys → matures Day 135
Day  90: Slot 2 settles, operator redeploys → matures Day 150
...and so on indefinitely

Settlement Outcomes

NO Wins (normal)

  1. Market resolves NO. NO shares settle at $1.00.
  2. Adapter claims settlement value, returns USDC to vault's idle reserve.
  3. Operator redeploys capital via openPosition() into a new market.
  4. Vault NAV increases by the accrued spread. Share price rises.

YES Wins (adverse)

Adverse Settlement

When a market settles adversely (YES wins), the adapter returns zero. The operator writes down that position to zero in the vault's registry. The vault NAV drops proportionally. Remaining positions continue accruing normally.

  1. Market resolves YES. NO shares are worthless.
  2. Operator calls writeOff(slotIndex).
  3. That slot contributes $0 to both modeled and market NAV.
  4. Share price drops proportionally to the lost allocation.
  5. If aggregate gap now exceeds 1500 bps, system pauses.
  6. Once the market has actually settled, operator calls reclaimSlot() to free the slot for reuse.

Operator Responsibilities

The operator's primary job is to keep 2–4 slots filled with healthy positions, staggering maturities so that settlement and redeployment are smooth. Key timing constraints:

  • After settlement, the operator has a 7-day window to identify and enter the next market
  • No more than one position should settle in any 14-day window
  • Positions entered at prices above $0.95 generate insufficient yield — avoid
  • Positions entered below $0.80 carry excessive binary risk — avoid