NAV and share pricing
Net asset value (NAV) is the value the vault's accounting assigns to its assets. It tells you what backs the shares, not how much USDC can be paid out immediately.
What is counted
NAV includes idle USDC and the values of the vault's investment positions, called legs. USDC already reserved for funded withdrawals is accounted for separately: it no longer backs outstanding shares.
An external action that has started but not settled can leave a pending claim. Its valuation path must keep that claim counted without counting both the claim and returned cash as separate assets.
Each adapter reports valuation information for its position. That can depend on an exchange rate, an issuer's redemption value or a permitted price feed. The reliability and availability of those sources are part of the investment's risk.
Low, middle and high values
A position can have a range of recognised values. The middle value supports booking the vault's result. Deposits use the high bound. Withdrawal funding uses the low bound. This avoids treating an uncertain position as having one exact price for every action.
Illustrative tranche, ignoring rounding and virtual offsets:
| Valuation used | Tranche value (USDC) | Outstanding shares | Price per share (USDC) |
|---|---|---|---|
| High bound for a deposit | 102,000 | 100,000 | 1.02 |
| Low bound for withdrawal funding | 100,000 | 100,000 | 1.00 |
A deposit of 1,020 USDC buys 1,000 shares in this simplified example. Funding 1,000 shares at the illustrated exit price reserves 1,000 USDC. The difference comes from valuation bounds, not necessarily a named vault fee.
Freshness and recognition
Share-changing actions need sufficiently recent valuations. An unavailable source can therefore stop an action even when the last displayed price looked reasonable.
Growth caps can limit how quickly a reported gain is accepted. Profit smoothing can delay allocation of a positive result to the tranche accounts. During that delay, the unallocated amount is called locked profit. It is an accounting reserve, not a separate deposit of risk-free cash.
Losses can consume locked profit first
Suppose the tranche accounts total 100,000 USDC and there is 1,000 of profit still locked. NAV is 101,000. If NAV then falls by 500 before any further unlocking, locked profit falls to 500 and the tranche accounts can remain at 100,000.
If the fall instead exceeds the remaining locked profit, the part reaching the tranche accounts follows the Junior-first loss waterfall. This example holds time constant to isolate the effect. Actual synchronisation also accounts for profit unlocking over time.
Recovery principal recognised through the recovery path is not locked as new ordinary profit. Impairment marks and market stress have their own conservative valuation rules.
Share arithmetic
The starting model is:
Tranche share price ≈ applicable tranche value / outstanding tranche sharesThe actual calculation includes virtual asset/share offsets and integer rounding. Offsets are small accounting amounts added to assets and share supply. They protect the initial share-pricing calculation. Deposit shares are rounded conservatively. Withdrawal shares are priced when funded, not when requested.
Queued shares remain in supply until funding. Funded USDC is a different claim from shares still waiting.
Investment implications
Compare an estimated position value with the quote for the action you intend. Ask which valuation bound is being used, how recent it is and whether profit remains locked.
Check liquidity separately: a correct valuation does not create cash for an immediate exit. Return to shares for the introductory explanation.