Vault Mechanics

This section covers the technical details of how Collective vaults work.

Vault Structure

Each vendor operates a separate vault. A vault consists of:

1. Smart contract — Handles deposits, withdrawals, and vault token issuance (on HyperEVM)

2. Liquidity pool — Stablecoins held on-chain

3. Off-chain inventory — Physical cards held by the vendor

4. Oracle/reporting layer — Updates vault value based on inventory valuations

Vault Tokens

When you deposit, you receive vault tokens representing your share. These follow the ERC-4626 standard (tokenized vault):

• Deposit: USDC in → vault tokens out

• Withdraw: Vault tokens in → USDC out

• Value: Vault tokens appreciate as the underlying vault grows

Vault tokens are transferable. You can send them to another wallet or (eventually) trade them on secondary markets.

Token Math

Vault Token Price = Total Vault Value / Total Vault Tokens Outstanding

Your Tokens = Deposit Amount / Vault Token Price

Your Value = Your Tokens × Current Vault Token Price

Example:

• Vault value: $100,000

• Tokens outstanding: 100,000

• Token price: $1.00

• You deposit $10,000 → receive 10,000 tokens

• Vault grows to $120,000 → token price is now $1.20

• Your 10,000 tokens = $12,000

Deposits

Deposits are accepted anytime and processed as follows:

1. User approves USDC spend

2. User calls deposit() on vault contract

3. USDC transferred to vault

4. Vault tokens minted at current price

5. Tokens sent to user's wallet

Deposits are immediately reflected on-chain, but capital may not be deployed until the next epoch.

Withdrawals

Withdrawals follow the epoch system:

1. User calls requestWithdraw() with token amount

2. Request queued for end of epoch

3. At epoch close, vault calculates final value

4. User calls completeWithdraw() to claim USDC

5. Vault tokens burned

For liquidity buffer withdrawals (small amounts), steps 2-3 may be accelerated.

Valuation

The vault's total value combines:

• On-chain balance: USDC in the vault contract (real-time)

• Off-chain inventory: Cards held by vendor (updated via oracle)

Inventory valuation uses:

• Recent comparable sales (eBay sold, auction results)

• Conservative estimates for less liquid items

• Discounts for ungraded or illiquid inventory

Valuations are updated at least weekly, always at epoch boundaries.

Epoch System

Phase	Duration	What Happens
Active	~11 weeks	Normal trading, deposits accepted
Request	~2 weeks	Withdrawal requests submitted
Settlement	~1 week	Valuation finalized, withdrawals processed

Exact timing varies by quarter and is announced in advance.

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