Transparency

Dawn Vault fully decomposes and discloses the source of every basis point of yield. We believe depositors deserve to know exactly where their returns come from.

Yield Provenance

Many DeFi yield products advertise an APY number without explaining its composition. Dawn Vault provides a full breakdown by source.

USDC Vault Yield Decomposition

Component	Source	Typical Range	Risk Level
Multiply Yield	Leveraged stablecoin loops via Kamino Multiply (ONyc/USDC, USDG/PYUSD)	9-16%	Low-Medium
Lending Yield	Interest from USDC lending (Kamino, Jupiter)	3-8%	Low
Funding Rate PnL	Net payments received from SOL-PERP shorts	8-23%	Medium
Staking Yield	dawnSOL staking rewards on spot leg	~7%	Low
Borrowing Cost	Interest paid on borrowed assets (Multiply borrow leg)	-(0-3%)	N/A
Execution Cost	Swap slippage, gas fees, position entry/exit costs	-(0.1-0.5%)	N/A
= Net Vault APY	Weighted average across allocations	9-20%	—

Example: Base Layer Only (Current Mode)

Multiply Yield:    +14.2%   (ONyc/USDC @ 2.5x, majority allocation)
Lending Yield:      +6.1%   (Kamino USDC, supplementary)
Funding Rate PnL:   +0.0%   (DN strategy inactive)
Execution Cost:     -0.0%   (minimal rebalancing)
─────────────────────────
Net Vault APY:     ~12-16%  (Multiply-dominant)

Example: Base + Alpha (High FR Period)

Allocation:  Multiply 30% / Lending 20% / DN 50%

Multiply Yield:    14.2% × 0.30 =  +4.3%
Lending Yield:      5.2% × 0.20 =  +1.0%
Funding Rate PnL:  18.4% × 0.50 =  +9.2%
Staking Yield:      7.1% × 0.50 =  +3.6%
Execution Cost:                     -0.3%
─────────────────────────────────────────
Net Vault APY:                     ~17.8%  (weighted average)

We will never report a blended APY number without providing its full decomposition.

Proof-Based Reporting

Dawn Vault publishes structured performance reports at regular intervals.

What We Report

Data Point	Frequency	Verification
Yield Breakdown (by source)	Every epoch	On-chain transaction data
Hedge Ratio (spot vs. short)	Every epoch	On-chain + CEX position data
Allocation Split (base vs. alpha)	Every epoch	On-chain vault state
Reserve Balance	Every epoch	On-chain account balance
Share Price	Continuous	On-chain LP token accounting
Cumulative PnL	Daily	Dashboard + historical data
Drawdown Metrics	Daily	Calculated from share price history

Independent Verification

Depositors can independently verify:

• Share price: Query the on-chain vault program directly

• LP token balance: Check their wallet

• Vault TVL: On-chain total assets visible to anyone

• Protocol positions: On-chain adapter positions are public

Important scope note: this repository currently exposes the off-chain operator stack, not the on-chain vault program itself. Independent on-chain verification therefore depends on Dawn Vault publishing the deployed program addresses, vault addresses, and proof/report endpoints separately.

Skin in the Game

Dawn Labs deploys its own capital under the exact same conditions as depositors — same vault, same strategy, same fee structure. No preferential treatment or separate accounts.

Yield Smoothing Reserve

The Yield Smoothing Reserve (YSR) is a stabilization mechanism funded by Dawn Labs' validator commission revenue.

How It Works

1. Accumulation: Validator commission revenue flows into the Reserve

2. Stabilization: When funding rates turn negative, the Reserve supplements vault yield to reduce APY dips

3. Recovery: When conditions improve, the Reserve replenishes

This mechanism is only possible because Dawn Labs operates a Solana validator — the commission revenue is an external income stream that doesn't come from depositor funds.

The Yield Smoothing Reserve is a stabilization mechanism, not a guarantee. It does not guarantee any minimum APY, does not insure against losses, and reserve size may be insufficient during prolonged adverse conditions.

The Reserve balance is disclosed in every epoch report. Depositors can track current balance, utilization rate, and accumulation vs. distribution history.