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EOL Settlement

EOL Settlement synchronizes the current status of EOL on each network with the states on the Mitosis Chain. For instance, when EOL generates rewards, they must be settled on the Mitosis Chain. This settlement process involves distributing the rewards to miAsset holders.

EOL Settlement encompasses three types:

  • Yield Settlement
    • Occurs when rewards are of the same type as the underlying assets. For instance, if 1 miETH generates 0.1 ETH as a reward, that 0.1 ETH is classified as "yield".
    • Yield increases the value of the miAsset. Note that miAssets implement ERC4626 interfaces, providing standardized functionality for yield-bearing tokens.
  • Loss Settlement
    • Occurs when there's a decrease in the value of underlying assets.
    • Loss decreases the value of the miAsset.
  • Extra Rewards Settlement
    • Occurs when rewards differ in type from the underlying assets. For example, if 1 miETH generates 3 MORPHO as a reward, those 3 MORPHO are classified as "extra rewards".
    • Extra rewards don't directly affect the miAsset's value. Instead, they accumulate for miAsset holders to claim.

Yield & Loss Settlement​

Yield and Loss Settlement Process This diagram illustrates the settlement of yield and loss for EOL.

  1. A strategist initiates a yield or loss settlement on the EOL Strategy Executor. The EOL Strategy Executor calculates the total value of underlying assets, including those in DeFi protocols, and compares it to the last settled total value. Any difference indicates unsettled yield or loss.
  2. The EOL status on each network is communicated to the Mitosis Chain via Hyperlane.
  3. For yield settlement, the Asset Manager mints hub assets equivalent to the generated yield and transfers them to the EOL vault. This increases the miAsset's value by changing the exchange rate between miAsset and Hub Asset. For instance, if 1 ETH yield is generated on an external chain, 1 ETH (hub asset) is minted to the EOL vault.
    • For loss settlement, the Asset Manager burns hub assets from the EOL vault, decreasing the miAsset's value.

Extra Rewards Settlement & Distribution​

Extra Rewards Settlement and Distribution Process This diagram illustrates the settlement and distribution of extra rewards for EOL.

  1. A strategist initiates an extra rewards settlement on the EOL Strategy Executor. The EOL Strategy Executor transfers extra reward tokens to the Mitosis Vault, making them ready for minting on the Mitosis Chain. Note that extra rewards differ in type from the underlying assets.
  2. The additional extra rewards are communicated to the Mitosis Chain via Hyperlane.
  3. The Asset Manager mints hub assets equivalent to the generated rewards. For example, if 1 MORPHO is rewarded on the external chain, 1 MORPHO (hub asset) is minted.
  4. The Asset Manager distributes the minted rewards according to configurations for each reward token type. Two distribution methods are available:
    • TWAB Reward Distributor
      • Distributes rewards to miAsset holders on-chain in real time. The reward amount for each holder is calculated based on their TWAB (Time-Weighted Average Balance).
      • This is the primary distribution method.
    • Merkle Proof Reward Distributor
      • Distributes rewards to miAsset holders periodically, based on a merkle proof provided by a trusted off-chain component.
      • Used when TWAB-based distribution is impractical or unfeasible.
  5. Users can claim their extra rewards from these distributors.

It's important to note that when users deposit their miAssets into dApps, extra rewards are distributed to those dApps. The dApps may then choose to redistribute these rewards to their users. This process, known as "Reward Redistribution," is discussed in more detail in Redistribution of Voting Power & Extra Rewards.