How much is deployed into yield farms?
Once a user has successfully supplied the supply asset into a vault, this is added to the vault position with an external lender and can subsequently be used as both:
collateral for a loan by the user
collateral used for yield generation on behalf of users
For each vault, a vault target threshold (vtt) is configured, which is the loan-to-value ratio the vault will aim to rebalance to during certain transactions (see more later in document).
The amount of assets deployed into yield farms is determined by the following formula:
where:
vTAA = vault target active assets is the target amount deployed into yield farms
vS = vault supply assets, the total amount supplied by users into the vault
P = price of the borrow asset
vTT = vault target threshold, determining how much to deploy in yield farms
vUB = vault user borrows, total amount of borrow assets borrowed by users
Factors such as price movements and changes in either the amount of supply assets and/or user borrows will affect vault target active assets.
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