Reserves

The funds received by the protocol, such as liquidity provider deposits or premiums, are stored in reserves. A reserve is a base contract that holds assets (USDC). We have two types of reserves: eTokens and Premiums Accounts.

Each reserve can be assigned a yield vault, an ERC-4626 contract that invests the reserve’s funds to get additional returns and can de-invest them when needed. See the Asset Management page for the details.

The returns coming from the yield vault will be treated differently depending on the specific reserve:

• ETokens: the yields of the yield vault generate an increase in the total supply, distributing the yield to all the LPs in proportion to their share of the liquidity pool.
• Premiums Accounts: in this case, the yields will have a treatment similar to the earned pure premiums precedence explained here.

Cash Movements