# Initial Parameters

This document briefly reviews a number of initial parameters set at Sense v1 launch.

# Stripping Application

# Issuance Fee Cap: 5%

The issuance fee cap is a max cap on what adapters can set for an issuance fee, and is set at the Divider level.

At a basic level, the upper limit on this should be the highest level that an adapter’s builder could in good faith expect a user to be willing to pay. We landed on 5% to avoid malicious actors creating exploitative adapters.

This is the window around maturity where a sponsor has the special ability to settle a series and collect the settlement reward before anyone else can. See the series lifecycle (opens new window) documentation for more information.

# Settlement Window: 3 hours

This is the window after the sponsor window, during which anyone can settle a series and collect the settlement reward. See the series lifecycle (opens new window) documentation for more information.

# Adapters

Sense v1 is going live with two yield stripping (opens new window) adapters built by the Sense team available from the get-go: an adapter for each of following Targets (opens new window):

  • cUSDC
  • wstETH

Our adapters will launch with an initial issuance cap, which is explained in our Guarded Launch Strategy (opens new window).

# cUSDC Adapter

Available Durations: 0-12 Months

While the Sense team will initially only sponsor and surface 1mo and 3mo series to the Sense Portal, we have released adapters with durations up to 12 months available for use in the near future. The community can spend gas to initialize new series with a single function call (opens new window), deploying all the contracts needed for a future yield market with a maturity (opens new window) at the top of any month not yet occupied. In an effort to reduce liquidity fragmentation after launch, however, only series deployed by the Sense team will be surfaced on the portal.

Issuance Fee: 0.25%

The issuance fee (opens new window) is the fee charged when users issue new PTs and YTs for a series, and they are awarded to whomever settles that series. The purpose of the issuance fee is to incentivize proactive series sponsorship. Over time, as multiple adapters are available at multiple durations with their own issuance fee parameters, issuance fees will essentially be decided by the open market between adapters. For our initial release, we’ve used a small but non-trivial fee for users to get used to the UI around fees, and to make sure there is some pay-off for sponsoring new series to encourage direct interaction with the adapters.

It’s worth noting that, in the future, there are some important basic series that Sense would like to be able to create adapters and sponsor series for at a 0% fee as a public good.

Sponsor Stake: 0.25 wETH

The purpose of the sponsor stake is to backstop the settlement reward when issuance fees are non-existent — even in a high gas cost environment. To make sure we would cover this we looked at gas costs over the last six months.

The gas cost for settling a series is about 106,000 (give or take a bit depending on the token with which the series interacts). At the highest gas cost in the past six months (218 gWEI) that settlement would cost around 0.024 ETH. In order to make sure there was a significant buffer, we 10xed that amount to come up with 0.25 wETH.

Minimum/Maximum Maturity: 1mo - 12mo from present

While our initial portal will only surface 1mo and 3mo maturities, the initial adapters will allow for monthly maturities up to 12mos. This is to allow us to test out longer maturities with the same adapters (if there is demand), since the same adapter can be used for an arbitrary number of series.

Mode (Monthly or Weekly): Monthly

Cup: Sense Multisig The cup receives value when we backfill, which only occurs if no one settles the series. If the adapter is enabled, then the cup receives the entire settlement reward (stake + issuance fees). If the adapter is disabled (which should rarely happen), then the cup only the issuance fees, and the series sponsor receives the stake.

See the series lifecycle (opens new window) documentation for more information.

# wstETH Adapter

The wstETH adapter settings are the same as the cUSDC adapter.

Available Durations: 0-12 Months

Issuance Fee: 0.25%

Sponsor Stake: 0.25 wETH

Minimum/Maximum Maturity: 1mo - 12mo from present

Mode (Monthly or Weekly): Monthly

Cup: Sense Multisig

# Space Pool Parameters

# Swap Fees: 5% off implied APY

These take 5% off of implied APY in yieldspace. This means that if APY is 5%, it takes 5% of 5% (i.e. 0.05 *0.05 = 0.0025) which would be 0.25% of the principal amount being used to fix yield.

Last Updated: 12/19/2022, 5:37:41 PM