FAQ

What is AlgoRai?

AlgoRai is a decentralized structured products platform.

What are structured products?

Structured products are financial instruments which have predefined features that offer returns based on an underlying asset and are often linked to derivatives. AlgoRai leverages structured products to achieve specific risk-return objectives, in our case, making measured, regular, and informed bets on the volatility of an asset in a systematic way, through smart contracts.

What are the structured products that AlgoRai offers?

AlgoRai offers structured products on Algo, BTC and ETH. These structured products generate yield on various strategies, including automated covered calls and put selling. More information on our structured products can be found here.

What are the risks in covered-call vaults?

Depositors may potentially give up asset appreciation upside in exchange for a guaranteed yield. This happens when the spot market price of the underlying asset exceeds the strike price or is “in the money” at the end of the round, and an amount equal to the difference between the settlement and strike price will be withdrawn and paid to the market makers. It is worth noting that this is uncommon, as our vaults carefully select strike prices to generate the highest returns with the lowest risk possible. Depositors will still be up in terms of USD values as the underlying asset would have had to appreciate significantly over a short period of time.

What are the risks in put-selling vaults?

Vault deposits may incur losses on a weekly basis when the spot market price of the asset is below the strike price or is “in the money” at the end of the round. An amount equal to the difference between the settlement and strike price will be withdrawn and paid to the market makers. Do note that this is an uncommon occurrence, as our strike prices are carefully selected to offer users the highest returns with the lowest risks possible.

What chain does AlgoRai operate on?

AlgoRai offers products on the Algorand and Ethereum blockchains.

Processing a deposit?

The beauty of AlgoRai is in its simplicity. Users can easily deposit their assets into our vaults through smart contract interactions.

Where do my deposits go?

User deposits go into secure vault smart contracts that have been rigorously audited.

How are deposits processed throughout the week?

Deposits at the beginning of a round (defined time period of operation from vault commencement to expiry of the option) will be immediately exposed to the vault’s performance of the following week. Deposits made mid-week will not the exposed to the performance of the current round, and will be exposed to the vault’s performance of the coming round.

How are withdrawals processed throughout the week?

Withdrawals made on funds that have been deposited mid-week and are not actively participating in the current round will not be exposed to any vault performance. These funds can be withdrawn at any point in time. Withdrawals made on funds that are actively participating in the current round will be exposed to the current active round, and made available for withdrawal at the end of the round.

How are vault yields paid out?

The asset you used to make a deposit in to the vault will be the same underlying asset you will receive as yield pay-outs. E.g. Algo covered-call selling vault earns and receives yield in Algo.

Do I have to reinvest the yield I earn from vaults?

No, our vaults automatically reinvest the weekly yields users earn back into the vaults. This essentially compounds the yield premiums for our users.

Can I buy the options written by AlgoRai vaults?

No, at the moment our options are only sold to whitelisted market makers.