Compound Fund
Last updated
Last updated
Strategic Importance of the Compound Fund
The Compound Fund is integral to Elemental’s unique approach.
In the short term, it serves as our secret sauce that enables us to deliver exceptional and consistent yields. It is grown by reinvesting a portion of our excess profits and requires time and dedication to build up.
But once sufficiently large, it acts as a formidable moat for Elemental in the long run it. These funds empowering us to further increase our fund capacities while still maintaining, or even growing our yield rates.
Operational Benefits of the Compound Fund
1) Above Market Yields: The Compound Fund, combined with user deposits, are deployed to yield farm. For example, if user deposits total $1,000, and the Compound Fund totals an additional $500, should the prevailing market yield be 10%, Elemental would be able to offer an elevated 15% yield to our users.
2) Consistent Yields: The Compound Fund also serves as a buffer. In good times, excess profits are added to the fund, growing it steadily. However, in bad times, if yields fall below expected minimums, the fund can be tapped to supplement the shortfall. This ensures consistency in the yields given to our users.
3) Emergency Funds: In the event of an exploit, the Compound Fund, along with our Insurance Fund, is crucial for covering these losses, safeguarding user investments from unforeseen risks.
