Depositors

"The Possums quickly determined that interacting with these Portals enabled new and exciting forms of travel.

Not for their physical bodies, not yet anyway, but for their mediums of exchange."

-Epigraph of the Traveler

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The primary user of Portals is the depositor who’s looking to take advantage of upfront yield opportunities, such as locking in a high yield rate or getting access to leverage without risk of liquidation

Let’s say, for example, there's a portal where users can deposit USDC to earn USDC yield on Aave. After depositing, they’ll be able to withdraw a portion of their yield upfront in the form of PSM tokens.

The second user of Portals is the yield speculator. If the provided yield in a portal is lower than what can be expected in the future, a yield speculator can buy future yield to sell it at a higher price later.

Upfront Yield and Early Withdrawals

One way to think of this is as if the depositor is depositing “cumulative time.”

For example, if you deposit 1000 USDC for 6 months, you’d have 6,000 “cumulative months” that you have to wait before you withdraw your last USDC. But in the meantime, you can withdraw a portion of your assets at any point. Say you withdraw $500 worth of PSM tokens immediately – the total still needs to equal 6,000 months, so each of the 500 remaining USDC in the Portal needs to be there for 12 months (12 * 500 = 6000).

So, on a high-level basis, the depositor deposits USDC and receives PSM from a Portal. But how did that PSM get in the Portal in the first place? Through one of two sources:

1. Initial funders who provide funding to the Portals before they launch

2. Arbitrageurs who see a mismatch between PSM’s market value and its value within the Portal

We’ll go over the initial funders first.