Settlement and Auction Process

There are 4 primary states:

1. Round Start, Auction Pending

2. Round In Progress, Auction Completed

3. Round End, Settlement Pending

4. Round End, Settlement Complete

Friday SGT 18:00, GMT 10:00 - Round Start, Auction Pending

• Vaults are closed to new deposits and withdrawals from investors for the current round, sequential vault auctions commence and conclude, winning bids confirmed and settled.

Vault Auction Process

1. An auction for a Vault is conducted

2. Auction concludes

3. Ops Team agrees and accepts bids

4. Market Maker pays premium to Admin

5. Admin deposits premium into the Vault

Friday SGT 19:00-16:00 +7 days, GMT 11:00-08:00 +7 days - Round in Progress, Auction Completed

• This state commences immediately following completion of the Vault Auction Process and remains until Round End.

• Vault options contracts are run till expiry on round end, the following Friday at SGT 16:00, GMT 08:00.

• User deposits and withdrawals initiated during this period are pending and only processed on round end, the following Friday at SGT 17:00, GMT 09:00.

Friday SGT 16:00, GMT 08:00 - Round End, Settlement Pending

• Settlement price is determined, options contract is deemed In The Money (ITM) or Out of The Money (OTM).

Options Settlement Process

If an option expires ITM:

1. The settlement amount calculation equals the difference between the calculated exercise-settlement price and the strike price of the option, multiplied by the vault asset volume, in the asset held by the DOV. For sake of clarity, this means put selling vaults which settle in the money will result in payout of USDC, and calls which settle in the money will be paid out in respective tokens, BTC, ETH, ALGO, or wrapped versions as appropriate.

2. The settlement price, strike price, and settlement amount are communicated to the Market Maker.

3. The Market Maker confirms the settlement price and amount.

4. The Vault pays out the settlement amount to the AlgoRai Administrator.

5. The AlgoRai Administrator pays out the settlement amount to the Market Maker.

If an option expires OTM:

No further action or settlement occurs for the Market Maker.

Friday SGT 17:00, GMT 09:00 - Round End, Settlement Completed

• New Round DOV parameters set, communicated, and indicative bids provided by Market Makers

• User deposit and withdrawal windows are open, all pending user deposits and withdrawals initiated during the prior round are completed.

*Subject to changes, valid as of 10 Aug 2022