Protocol
Early break and redistribution
The owner of a locked blade can break it at any time. A break returns the blade's full principal and forfeits the interest it has accrued; the forfeited amount is shared among the blades still locked in the protocol and paid to them when they mature.
What breaking a blade does#
At the moment of a break:
- The owner receives the blade's full principal, subject to the risks described in Security and risks.
- All interest the blade has accrued is forfeited.
- Any redistribution allocations the blade holds from earlier breaks are forfeited as well.
- The blade becomes broken, and its slot is empty.
Breaking one blade never affects the owner's other blades. They keep their principal, their accrued interest, their allocations and their maturity dates.
How forfeited interest is shared#
At the moment of the break, the forfeited amount is allocated to every other blade locked in the protocol at that time, whoever owns it. That includes the breaking owner's other locked blades. Each blade's share is proportional to its weight:
weight_i = principal_i × boost_i
share_i = forfeited × weight_i / Σ weight_j
The sum runs over every blade j locked at the moment of the break,
excluding the broken blade.
Blades that have already matured are not locked, so they receive nothing. Blades opened after the break receive nothing from it either.
Weight and the $VANE boost#
The boost is 1 for a blade whose owner does not stake $VANE, so without staking the weight is simply the principal. Staking $VANE is planned to increase a depositor's boost. The boost formula is announced at launch. The boost affects only the redistribution of forfeited interest; base interest from the yield source is always shared pro rata to principal and time locked.
When allocations are paid#
Allocations are not paid immediately. They are recorded on each receiving blade and paid only when that blade reaches maturity, together with its principal and net interest.
If a receiving blade is itself broken before maturity, its allocations are forfeited along with its own interest, and redistributed in the same way to the blades locked at that moment. Redistribution therefore rewards blades that are held to maturity.
What happens to the slot after a break#
The slot of a broken blade stays empty until its next monthly turn, which is the month in which the broken blade would have matured. A new blade can be opened in that slot at that turn. The slot rejoins the wheel at the same position, and the wheel keeps one maturity per month.
Worked example: a single break#
All figures are illustrative. Amounts are in USD stablecoin units, the rate is an illustrative 5% annual rate (not a forecast), every boost is 1, and the protocol fee is left out.
Blade E has a principal of 2,400 and was opened three months ago.
accrued interest on E = 2,400 × 0.05 × 3/12 = 30
At the moment E is broken, four other blades are locked in the protocol:
| Blade | Principal (= weight) | Share of total weight | Allocation |
|---|---|---|---|
| A | 1,000 | 1,000 / 10,000 | 3 |
| B | 2,000 | 2,000 / 10,000 | 6 |
| C | 3,000 | 3,000 / 10,000 | 9 |
| D | 4,000 | 4,000 / 10,000 | 12 |
| Total | 10,000 | 30 |
The owner of E receives 2,400 now. The 30 of accrued interest is forfeited and allocated as above. A, B, C and D each receive their allocation only when they reach maturity. E's slot stays empty until the month in which E would have matured.
Worked example: a receiving blade is broken#
Later, before its maturity, B is broken too. By then B has accrued 15 of its own interest, and it still holds the allocation of 6 from E's break.
forfeited by B = own accrued interest + allocations held
= 15 + 6
= 21
The owner of B receives its 2,000 principal. The 21 is redistributed among the blades locked at that moment. Suppose those are A, C and D only, with a total weight of 8,000. E is no longer locked and receives nothing.
| Blade | Weight | Share of total weight | New allocation | Allocations now held |
|---|---|---|---|---|
| A | 1,000 | 1,000 / 8,000 | 2.625 | 5.625 |
| C | 3,000 | 3,000 / 8,000 | 7.875 | 16.875 |
| D | 4,000 | 4,000 / 8,000 | 10.5 | 22.5 |
| Total | 8,000 | 21 | 45 |
The 45 now held by A, C and D equals E's forfeited interest (30) plus B's own accrued interest (15). B's earlier allocation of 6 has moved on to the remaining blades. Had other blades been locked at the moment of B's break, they would be part of the total weight.
Breaking a ladder versus breaking a single deposit#
As a separate illustration, take a full wheel of six blades of 2,400 each, 14,400 in total, and compare it with a single six-month deposit of the same amount. Assume cash is needed three months into the term, at the same illustrative 5% rate.
| Single six-month deposit of 14,400 | Full wheel of six blades of 2,400 | |
|---|---|---|
| What is broken | The whole deposit | One blade, E |
| Principal returned now | 14,400 | 2,400 |
| Interest forfeited | 14,400 × 0.05 × 3/12 = 180 | 30 |
| Still locked and earning | Nothing | 12,000 in five blades |
Breaking a single deposit forfeits all the interest on the whole amount. A ladder breaks only the blade that covers the need. Two further options exist only on a ladder: with a full wheel, the next maturity is at most a month away, so a need that can wait requires no break at all; and because blades are at different points in their terms, the owner can choose which one to break, for example a recently opened blade that has accrued less.
The simulator lets you try breaks with illustrative inputs. Nothing is deployed, and its outputs are hypothetical.