Fixed Deposit Mechanics
Key Characteristics
This diagram outlines how capital flows through Elemental’s Fixed Deposit system, from deposit to yield distribution.
At a high level, the process is designed to separate user experience from backend operations, allowing for a simple interface while maintaining disciplined capital management behind the scenes.
Step-by-Step Flow
1. Deposit Depositors deposit funds into Elemental’s Fixed Deposit vaults.
2. Deployment Capital is deployed on-chain across a range of market-neutral strategies. Allocation is actively managed and adjusted over time.
3. Yield Distribution Users receive a fixed yield for the duration of the epoch. This is defined at the start of each cycle.
4. Profit Allocation Any excess returns generated beyond the fixed yield are split into two areas:
Operational costs
The Compound Fund
5. System Reinforcement The Compound Fund acts as an internal reserve. In periods where strategy returns are lower than expected, it may be used to support yield consistency.
Design Principles
The system is built around a few core ideas:
Separation of layers User-facing simplicity is maintained, while backend capital allocation remains flexible and adaptive.
Controlled distribution Yields are defined per epoch, allowing for clarity without exposing users to intra-cycle volatility.
Long-term reinforcement A portion of excess returns is retained within the system to strengthen its ability to operate across different market conditions.
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