How It Works
This page explains the vault's internal mechanics: the two-bucket model, how funds flow through the system, and how the share price grows over time.
Fund Flow
The following diagram shows the lifecycle of your MOTO from deposit through compounding:
- You deposit MOTO into the vault and receive cpMOTO shares.
- Your MOTO enters the liquid buffer (uninvested, ready for exits).
- At the next compound cycle, the vault moves most of the liquid buffer into MotoChef staking.
- MotoChef generates reward tokens over time.
- When a compound window opens, the vault harvests all accumulated rewards.
- Reward tokens are swapped to MOTO through MotoSwap.
- A small protocol fee is taken from the rewards and sent to the treasury.
- The remaining MOTO is re-staked in MotoChef, and the cycle repeats.
The Two-Bucket Model
The vault maintains two "buckets" of MOTO at all times:
Liquid Bucket
Uninvested MOTO held directly in the vault contract. This includes:
- New deposits that have not yet been staked
- A reserve buffer kept aside for immediate withdrawals
The reserve ratio determines what percentage of total assets stays liquid. With a 15% reserve ratio, if the vault holds 10,000 MOTO total, approximately 1,500 MOTO remains in the liquid bucket.
Staked Bucket
MOTO that is actively staked in MotoChef, earning rewards. This is the majority of the vault's holdings and is not directly accessible until the next compound window opens.
Why two buckets? The liquid buffer ensures that users can withdraw without the vault needing to unstake everything from MotoChef. This keeps the capital working while still allowing exits.
Share Price Growth
The share price is the ratio of total vault assets to total cpMOTO supply:
Share Price = Total Assets / Total cpMOTO Supply
Every time the vault compounds, total assets increase (because harvested rewards are added), while the cpMOTO supply stays the same. This causes the share price to rise.
Example With Numbers
Imagine you deposit 1,000 MOTO when the vault is brand new:
| Event | Total Assets | cpMOTO Supply | Share Price | Your 1,000 cpMOTO Worth |
|---|---|---|---|---|
| You deposit 1,000 MOTO | 1,000 MOTO | 1,000 cpMOTO | 1.000 | 1,000 MOTO |
| First compound: +50 MOTO rewards | 1,050 MOTO | 1,000 cpMOTO | 1.050 | 1,050 MOTO |
| Second compound: +52.5 MOTO rewards | 1,102.5 MOTO | 1,000 cpMOTO | 1.1025 | 1,102.5 MOTO |
| Third compound: +55.1 MOTO rewards | 1,157.6 MOTO | 1,000 cpMOTO | 1.1576 | 1,157.6 MOTO |
After three compounds, your original 1,000 MOTO deposit is now worth approximately 1,158 MOTO -- a 15.8% gain -- without you doing anything.
Because rewards are re-staked, each subsequent compound earns rewards on top of previous rewards. This is the power of compounding. The longer you stay, the more each cycle adds.
Total Assets Accounting
The vault tracks total assets separately from actual on-chain balances. This is a deliberate security measure called donation-proof accounting. If someone sends MOTO directly to the vault contract (without going through the deposit function), it does not inflate the share price. Only MOTO that enters through the proper deposit or compound flow counts toward total assets.