Reinvesting rewards and compound growth
Cycle vaults take deposited funds and stake them in a 3rd party reward program. The rewards earned from this program can be reinvested at any time. This simply involves:
- Swapping the rewards for the necessary tokens that make up the deposit token, usually an LP token
- ex. PNG rewards from the AVAX/PNG vault will be swapped to half PNG and half WAVAX
- Providing those tokens as liquidity to receive that LP deposit token
- Adding the received LP tokens back into the principle vault fund
This outlines an example of a compounding strategy. Every time rewards are reinvested, the principle fund grows and vault share holders increase their LP position.
To keep this process moving, a small call fee will be sent as WAVAX to the caller of the reinvest operation. This is a small, adjustable percentage of the rewards earned. See more details on the Reinvest page.