Docs / How it works
How it works
You choose one number. Floor does the rest.
The four steps
- 1. Deposit. Deposit USDT only and pick a basket: NVDAB, SPCXB, QQQB. Launch caps: 1,000 USDT per position, 5,000 USDT in total.
- 2. Pick your floor. Choose the lowest value you accept, for example 90% of your deposit, for a one-year term. At 90%, the vault aims to keep your value near 90% of your deposit, and it holds unless prices gap more than about 24% before the vault can rebalance. It is not a cap: the worst one-week window we simulated lost 24%.
- 3. The vault keeps you above the line. The gap between your value and your floor is a cushion. The vault holds more stock when the cushion is big, and less when it is small. When prices fall, it sells some stock for USDT. When prices rise, it buys some back. Each move is a normal swap on BNB Chain.
- 4. Withdraw when you like. Your money stays in your own vault contract, one per position. You can exit at any time with
exitInKind, or take it all out as USDT at the end of the term. See exits.
The floor and the cushion
Think of the gap between your value and your floor as a cushion. Floor holds four times your cushion in stock, and the rest in USDT. If the cushion shrinks, the vault sells stock for USDT. If it grows, the vault buys stock back.
Value V = 100% of deposit
Where the money sits at the start (stock = 4 × cushion)
Schematic for a 90% floor. Not backtest data.
The 4× rule
The rule is called constant proportion portfolio insurance (CPPI). The vault holds 4 times your cushion in stocks (never more than your whole value), and the rest in USDT. In symbols: stock = min(4 × (value − floor), value).
The 4 is why the floor survives a sudden drop: the floor can absorb a one-day drop of about 1 ÷ 4 = 25%, because 4 × 25% = 100% of the cushion. Trading costs and the vault's sell band eat about a point of that, so the real limit is about 24%. This is the “gap limit”. We tested the rule on 98 years of data: no one-year period without a bigger one-day drop ended more than 1 point below its floor (Evidence). Why 4 and not higher is shown on the backtest page: at higher multipliers the floor was breached in some windows.
Backtest, past data, not a prediction.
Source: docs/data/vault_path_nvda_worst.csv
Step by step: a $10,000 deposit
With a 90% floor, the floor is $9,000 and the cushion is $1,000. The vault holds 4 × $1,000 = $4,000 in stock and $6,000 in USDT. Then the stock moves. Schematic, not backtest data.
| Step | Event | Stock | USDT | Value | Cushion | Stock target | Trade |
|---|---|---|---|---|---|---|---|
| 0 | Deposit, first rebalance | $0 | $10,000 | $10,000 | $1,000 | $4,000 | buy $4,000 |
| 1 | Stock falls 10% | $3,600 | $6,000 | $9,600 | $600 | $2,400 | sell $1,200 |
| 2 | Falls 10% again | $2,160 | $7,200 | $9,360 | $360 | $1,440 | sell $720 |
| 3 | Gap of 25% before any trade | $1,080 | $7,920 | $9,000 | $0 | $0 | sell $1,080 |
| 0b | From step 0, stock rises 10% | $4,400 | $6,000 | $10,400 | $1,400 | $5,600 | buy $1,200 |
The prototype shows the same steps for any basket and floor you pick. Nothing is sent.
What if value reaches the floor?
The vault moves fully into USDT and stays there until the term ends. This protects your floor. It also means you miss any recovery during that term. We call this the cash lock. The one-year term resets it.
Where the rule comes from
CPPI is not new. André Perold described the idea in 1986. Fischer Black and Robert Jones published it as “Simplifying Portfolio Insurance” in 1987 (from memory, not yet checked against the paper). Banks have used it for decades inside principal-protected notes. Floor runs the same rule with public contracts and plain spot swaps.
Next: what it costs you, on The trade-off.