đScenarios: Vessels & Fees
Detailed analysis how vessels & fees behave in Trinity
Scenario 1: Bob opens a vessel
Starting with a simple example to illustrate, borrow fee is calculated as follows:
Bob has a vessel for tfBILL collateral with the following parameters:
tfBILL borrow fee = 4.00%
tfBILL max LTV = 90%
On day 0, Bob's vessel has the following values*: *assume tfBILL token price = $1.000 at inception
Collateral = 1,000,000 tfBILL tokens ($1,000,000)
Outstanding debt = 900,000 TRI ($900,000)
LTV = $900,000 / $1,000,000 = 90%
After 52 weeks (364 days), Bob's vessel now has the following values*: *assume tfBILL earns 5.00% APY, and token price now = $1.05
Collateral = 1,000,000 tfBILL tokens ($1,050,000)
Outstanding debt = 936,715.29 TRI ($936,715.29)
[= 900,000 TRI *
LTV = $936,715.29/ $1,050,000 = 89.21%
Scenario 2: Bob closes position on day 364
After 52 weeks, Bob decides to close his vessel position.
Collateral = 1,000,000 tfBILL tokens ($1,050,000)
Outstanding debt = 936,715.29 TRI ($936,715.29)
[= 900,000 TRI *
LTV = $936,715.29/ $1,050,000 = 89.21%
Bob takes the following actions:
Bob repays 936,715.29 TRI (900k principal + 36k in borrow fees)
Bob withdraws 1,000,000 tfBILL tokens (now worth $1,050,000)
Now, Bob's vessel is closed.
Scenario 3: Bob closes position on day 365
Now, instead of closing his position as in the scenario above, let's assume Bob leaves his position open one day longer before closing it out.
This scenario shows the impact caused by borrow fees being paid upfront at the beginning of each weeklong period:
Bob decides to close his position on Day 365 (instead of Day 364). His vessel position is as follows:
Collateral = 1,000,000 tfBILL tokens
Outstanding debt = 937,435.84 TRI ($937,435.84)
= (900,000 * ()
LTV = $937,435.84 / = 89.12%
Impact:
Bob must repay an additional 720.55 TRI (vs. Day 364 outstanding balance)
Bob does not receive a refund for the borrow fee he prepaid for the remainder of the week.
Note that Bob's LTV also decreases slightly from 89.21% on day 364 to 89.12% on day 365.
Scenario 4: Mid-week vessel changes
Now, instead of closing his position, let's assume Bob decides to increase his position on day 369 (halfway through the next week).
Instead of closing his position, Bob decides to borrow an additional 10,000 TRI on day 365 After this 10,000 TRI new borrow, Bob's vessel is as follows:
Collateral = 1,000,000 tfBILL tokens
Outstanding debt = [TBU]
[TBU]
LTV = [TBU]
Note that Bob's LTV decreases slightly from 89.21% on day 364 to 89.12% on day 365.
Scenario 5: Borrow Fee on is reduced to 3.75%
Trinity governance adjusts the borrow fee on tfBILL, reducing it to 3.75% on day 365. Bob's vessel remains unchanged until the next protocol update (unless he interacts with the vessel before the next update). At the next protocol update on day 371, Bob's vessel is as follows:
Collateral = 1,000,000 tfBILL tokens
Outstanding debt = 937,390.81 TRI ($937,390.81)
= *
LTV = $937,390.81 / $1,052,131.85 = 89.09%
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