VT Value Anchoring

The value of VT is anchored through the following three methods.

Price formula

In the swap price formula for VT and T, rateAnchor plays a certain anchoring role. As time progresses, rateAnchor will gradually approach 1, meaning that the price of VT will slowly converge toward T.

Automated Buyback Mechanism:

Although rateAnchor exists, the market may still experience price instability due to fluctuations in supply and demand dynamics. The protocol will use the received T to repurchase VT in the market, increasing VT price stability and reducing the gap between VT and T. The workflow is as below:

Rigid redemption at the end

This is the ultimate guarantee of value anchoring: after the Vault operation ends, all circulating VT can be redeemed 1:1 for T.