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User Flow

Example

Alice has some SOL. She wants to earn yield on it while retaining exposure to market rallies.
  1. 1.
    Mid-epoch, Alice deposits 1 SOL into the Volt #01 covered call. This becomes a pending deposit, and Alice must wait for the current epoch to end before the deposit is activated.
  2. 2.
    At the start of the next Epoch, Alice’s 1 SOL deposit goes from "pending" to "active" in the Volt. Alice receives a VoltToken which represents her share of the Volt. This token works similarly to VoltTokens in other Friktion Volts which you can read about here.
  3. 3.
    Friktion's team gets together and selects the best strike for that week's market, in the 5 to 10 delta range. The volt mints tokens representing covered calls via Soloptions or Inertia and sells the tokens to bidders in an open auction, generating premium equivalent to the bid price (in USDC) multiplied by the number of options. This number, divided by the dollar value of the volt, is that week's yield.
  4. 4.
    If the price settles on Friday 2am below the set strike, the user profits the premium, benefiting relative to those who solely held SOL underlying. If the prices settles above the strike, the user's SOL pnl will be negative -1 * (settlement price - strike) / (settlement price) * (total deposits in SOL). However, the USDC pnl will still be positive, equal to (strike - price at beginning of week) * (total deposits in SOL).
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