Fundamental Value, Redemption Value, and TRD

Two values describe a yb-LP share at any moment: what the vault says it's worth, and what you'd actually receive if you withdrew right now. The gap between them is the Temporary Redemption Discount (TRD).

The two values you'll see

Value	What it is	What it answers	Source
Fundamental Value	The vault's accounting of per-share value. Oracle-priced and smoothed.	What is my share worth on the vault's books?	LT.pricePerShare()
Redemption Value	What you would actually receive if you withdrew right now. Reads live pool state.	What would I get out today?	LT.preview_withdraw(shares)

They are labelled as Fundamental PPS and Redemption PPS. Both are visible at the same time.

Fundamental Value reflects what the vault holds per share, independent of current exit slippage. It grows from trading fees, favourable LEVAMM rebalances, and refueling subsidies. Redemption Value reflects the actual price at which Cryptoswap and LEVAMM would execute your withdrawal right now.

When the two agree, the underlying market and the vault are in sync. When they differ, you can see the gap as TRD.

Example

You hold 100 yb-LP shares in a cbBTC market right after a sharp BTC move.

• Fundamental Value puts the position at 1.02 cbBTC.
• Redemption Value would deliver 1.01796 cbBTC if you withdrew right now.
• TRD = 1.01796 / 1.02 − 1 = −0.20%.

On a $100,000 cbBTC position, the vault's books reflect about$200 of value that a withdrawal in the same block would not deliver. The $200 isn't lost; it's the transient gap before arbitrage closes Cryptoswap's lag against the LEVAMM oracle.

This kind of gap resolves within hours: arbitrageurs move Cryptoswap's state back into alignment and Redemption Value catches up to Fundamental Value. In most market conditions TRD sits at or near zero and a withdrawal delivers Fundamental Value.

When TRD is open, it's normally negative: Redemption sits below Fundamental and the negative sign signals that the realisable exit value is below the books. Positive TRD (a small premium where Redemption sits above Fundamental) does occur but is rare. A meaningful gap in either direction is itself uncommon.

Why TRD appears

The practical consequence first: when the external price moves, a withdrawal goes through a pool that hasn't fully caught up yet, so it delivers slightly less than the books say. That gap is TRD.

The mechanism behind it is that YieldBasis sits on top of two AMMs that rebalance on different schedules.

Cryptoswap (the underlying pool). Cryptoswap concentrates its liquidity around an internal reference price called price_scale. When the external market moves, price_scale doesn't follow immediately — it waits for two conditions:

• A minimum price move. The external price must have shifted by at least the pool's adjustment_step. This threshold varies by pool: the WETH pool sets it around 0.5%, while BTC pools use a much smaller value (so any meaningful move qualifies, and the binding constraint becomes the second condition).
• A profit floor. The pool tracks cumulative LP profits and maintains a floor at 50% of those lifetime profits. It only recenters if doing so leaves per-LP value above that floor. The gap between current value and the floor is the pool's rebalance reserve — what the pool can spend on recentering without dipping below the floor.

When both conditions are met, Cryptoswap recenters. Until they are, its internal price_scale is stale relative to the market.

LEVAMM (YieldBasis's leveraged AMM). LEVAMM tracks the oracle continuously, rebalanced every block by arbitrageurs (see Compounding Leverage). It doesn't wait for fee accumulation; it follows the oracle in real time.

When the external price moves, LEVAMM tracks it immediately and Fundamental Value reflects the new price. Cryptoswap waits for its two conditions and lags behind. A withdrawal in that window unwinds through a stale Cryptoswap state, delivering slightly less than the oracle-implied value. That difference is TRD.

The gap closes when Cryptoswap recenters — automatically, as trading volume accumulates fees and the rebalance reserve grows, and as arbitrageurs trade through both AMMs to align them.

TRD formula

TRD is the signed gap between Redemption and Fundamental:

$\text{TRD} = \frac{\text{Redemption Value}}{\text{Fundamental Value}} - 1$

Negative TRD means Redemption is below Fundamental — the typical shape of a gap when one is open — and you'd give up that fraction of value by exiting now. Positive TRD (rare) means Redemption is above Fundamental — a small premium on exit. Zero TRD means the two are aligned, which is the prevailing case. The dashboard shows this as Market TRD (pool-wide) and My TRD (your position).

How TRD resolves

Resolution typically takes hours. Dynamic rpf and the tightened tweak_price flow keep Cryptoswap's price_scale close to the oracle, so arbitrage closes any gap quickly.

If you exit while TRD is open, the discount becomes a real loss. A one-hour wait usually closes most of a gap, and the typical gap is small enough that an immediate exit costs little.

Two distinct longer-term effects

TRD is the short-term gap. Two separate longer-term effects can also reduce what you receive, and they apply to different holders. They are not the same as TRD, and they are not the same as each other.

PPS drag (unstaked). Fundamental Value itself can grow more slowly than expected, or briefly decrease, when cumulative rebalancing costs outpace fee income over a stretch of holding. This is structural and bound to the holding period. Fundamental Value resumes climbing once forward fees catch up. An unstaked LP who held through a 30-day stretch where rebalance cost exceeded fee income by 0.6% would see Fundamental Value drop from 1.0000 to 0.9940; recovery depends on subsequent fees outrunning costs.

Watermark shortfall (staked). If you're staked and price-per-share sits below its high-water mark, staked is in recovery. Future admin-fee inflows route to staked first, restoring parity. The same 0.6% net loss for a staked LP shows up as price-per-share falling 0.6% below its high-water mark; subsequent fees route there until the gap closes. YB emissions continue to accrue throughout. See Watermark and Recovery.

When to act on TRD

• Depositing. TRD doesn't directly affect your deposit; new shares mint at Fundamental Value. But a deep negative TRD usually signals recent volatility that hasn't yet propagated through Cryptoswap. Hybrid Vault deposits also adjust the backing requirement when TRD is negative — see Hybrid Vaults.
• Withdrawing. Use Redemption Value, not Fundamental Value, to estimate what you'll receive. The two are usually aligned; if Redemption Value sits noticeably below Fundamental Value, a short wait (typically hours) usually closes most of the gap.
• Staked. TRD applies to your withdrawal the same way it applies to unstaked. If the staked side is also below its watermark, that's a separate, recoverable concern — see Watermark and Recovery.

What to watch on the dashboard

Field	What it tells you
Fundamental PPS	The vault's per-share accounting value.
Redemption PPS	The live withdraw quote per share.
Market TRD	The market-wide gap between Fundamental PPS and Redemption PPS.
My TRD	The gap as it applies to your position.

For a field-by-field walkthrough, see Analytics.

Related

• Watermark and Recovery: why a staked position can sit below its high-water mark, a separate effect from TRD.
• Compounding Leverage: how LEVAMM tracks the oracle every block while Cryptoswap lags.
• Hybrid Vaults: the TRD-adjusted backing rule for deposits.
• Withdraw Liquidity: using Redemption Value to estimate what an exit returns.
• yb-LP Share Value Derivation: the math behind Fundamental and Redemption Value.