Mars Ecosystem Vaults
Description of how a vault works over a vested linearly minted farm

How do the MARS farms on Autofarm work?

When depositing in Mars Ecosystem vaults you’ll have to be aware of how the vesting period works and what means linearly vesting. Vesting means that rewards are locked to a certain period of time, in the case of Mars Ecosystem this lock works for 180 days, that’s the amount of time that needs to pass to fully get your harvested rewards. In the case of these farms, the vesting is linearly minted through these 180 days, so you are gonna be able to claim a fixed percentage of the vested rewards every 3 days.
So how do these farms work normally, without a vault in the middle:
Mars farm earnings without autofarm
As you can see, you are going to earn 0.5% daily, but as the rewards are vested, you are only able to claim a bit each day. After the 180 days, we will get a full 0.5% * (60/60) = 0.5% daily APR if we have been harvesting daily, being this the maximum daily APR achievable.

So, how this works with the Autofarm vault?

When you make a vault on top of a farm like this calculating daily APR can get a little bit tricky. There are several variables to take into account that make calculating something like daily APR virtually impossible. This doesn’t mean that this is not a profitable vault, but you should enter this vault understanding that you will be getting the juiciest in the long term, being the maximum daily APR is going to be obtained when 180 days have been passed since you entered.
A vault working with linearly minting vesting means that rewards will not be released all at once, so you need to understand this is a long term vault
So let’s see how this works in the previous example. In this case, Autofarm vault will handle the claiming for you, selling that XMS reward claimed for more BUSD, and obtaining a different APR every day. Also, you have already a huge advantage since the daily XMS harvesting plus daily the claiming would have gas costs, and on these points, you will already save a lot of time and transaction fees since this all will be automatically handled.
In the following example, I will show how this works, neglecting gas fees, considering no new depositors enter the vault. Also will assume that all claimable XMS is sold for BUSD and re-deposit into the vault, with the price of XMS being 1 XMS = 1 BUSD along with the whole duration of the vault.
Mars strat only compounds one time every three day
Claiming of rewards is only possible one time every three days, so there will be two doays where you'll see little activity in the vault, and then a big compound on day three.
Now as you can see the yield gets better every day that passes, but there is some factor that can affect the expected yield, people withdrawing and depositing more into the vault. When the deposited amount in the vault changes this can affect APR in the following ways:
  • Increasing deposits and TVL, means previous vested rewards are distributed with more stakers thus obtaining less APR than expected.
  • Decreasing deposits and TVL, means previous vested rewards are distributed with fewer stakers thus obtaining more APR than expected.
  • TVL is stable as time goes by, which means the previous reward is distributed with the same stakers across time thus obtaining closer to the expected APR.
As you can see the first scenario affects early stakers negatively, so in order to counter this we have a 1% deposit fee to enter the vault. This fee is distributed across all early stakers, to compensate for the loss they will have on their previous vested rewards.
Something else to have in mind when engaging with this type of vault is that you have an advantage/disadvantage when depositing and withdrawing. When people join later they will enjoy the vesting rewards from the previous stakers, but when you leave, you are forfeiting your vested rewards for the people that remain staked. So what’s a benefit when depositing, will be a loss when withdrawing.
As usual in all vaults, expected APR can change due to changes in the price of the reward being harvested and the price of the asset being compounded. Since this vault has vesting involved then this can have more unexpected repercussions in the long term.