Understanding Performance of a Vault

The performance of a Fusion vault can be measured and displayed in two ways:

• Strategy APY

• Share Price

Strategy APY

The Strategy APY indicates the short-term performance of the strategy.

Depending on the strategy's elements, this may also be merely a forecast. For example, if part of the strategy's yield consists of token rewards that can only be claimed and compounded at a later date, it is impossible to predict what value these tokens will have. The current value of the respective token is used to calculate the Strategy APY. The actual realized performance of the strategy can then be higher or lower than forecast depending on the token price.

Share Price

The second way to display vault performance is the share price.

The share price is the exchange rate that determines how much of the underlying asset a single vault share token is currently worth.

It essentially represents the value of one share of ownership in the vault's total pool of assets.

Key Concepts

• Shares: When a user deposits an underlying asset (like USDC, ETH) into a Fusion vault, they receive vault share tokens in return. These tokens represent their proportional ownership of the vault's total assets.

• Total Value Locked (TVL) / Total Assets: This is the collective amount of the underlying asset held by the vault, including the initial deposits plus any accrued profits from the vault's automated yield-generating strategies.

• Calculation: The share price is calculated by dividing the vault's Total Assets by the Total Supply of Vault Shares:

This document explains which factors influence the share price.

Relationship between Strategy APY and Share Price

For the reasons mentioned above, Strategy APY and share price do not always move synchronously. It can even happen that they temporarily move in different directions. For example, if the vault uses a strategy involving leveraged looping, and the exchange rate (e.g., stETH/ETH) fluctuates, this will affect the share price if the vault uses a market price oracle to calculate it. For instance, if the stETH/ETH exchange rate drops from 1.00 to 0.999 and the vault is leveraged 10x, then, to put it simply, the share price will decrease by 10 x 0.1% = 1%.

However, the performance of Strategy APY and share price generally coincides over the long term. In individual cases, however, larger deviations may occur. Unfortunately, this cannot be completely avoided due to the numerous factors influencing the share price.