# Strategies

> **Yield from cross-chain settlement activity.**

Sova Vaults generate yield through **cross-chain settlement fees**. Unlike typical DeFi yield farms relying on token emissions, Sova yield is derived from real economic activity.

***

## How It Works

Vault capital is deployed to fund solver operations that settle cross-chain swap intents. Users deposit cbBTC, solvers access this liquidity to fulfill swaps, and the vault earns settlement fees.

***

## The Yield Loop

| Step           | Description                                            |
| -------------- | ------------------------------------------------------ |
| **1. Deposit** | Users deposit cbBTC into the vault                     |
| **2. Access**  | Solvers access vault liquidity for cross-chain intents |
| **3. Settle**  | Settlement fees (0.5%) captured on each swap           |
| **4. Accrue**  | Fees flow to vault, increasing svBTC exchange rate     |
| **5. Earn**    | Depositors earn yield proportional to vault share      |

***

## Yield Sources

| Source                 | Description                                      |
| ---------------------- | ------------------------------------------------ |
| **Settlement Fees**    | 0.5% fee on all cross-chain swap volume          |
| **Solver Spreads**     | Competitive pricing margins from solver auctions |
| **Capital Efficiency** | Optimized liquidity deployment across routes     |

> **Real Yield**
>
> All returns originate from actual transaction fees — no inflationary token rewards.

***

## Vault Structure

The svBTC vault is deployed as an **ERC-4626 compliant** smart contract.

| Parameter         | Value               |
| ----------------- | ------------------- |
| **Deposit Asset** | cbBTC               |
| **Vault Token**   | svBTC (ERC-4626)    |
| **Yield Source**  | Settlement fees     |
| **Exchange Rate** | Increases with fees |

***

## Vault Lifecycle

### 1. Deposit

Deposit **cbBTC** into the vault on Base.

### 2. Token Issuance

Receive **svBTC tokens** representing your proportional vault share.

### 3. Capital Deployment

Vault liquidity funds solver operations for cross-chain settlements.

### 4. Yield Accrual

Settlement fees increase the svBTC:cbBTC exchange rate.

### 5. Redemption

Redeem svBTC for cbBTC plus accumulated yield after the 30-day redemption period.

***

## Parameters

| Parameter             | Value                 |
| --------------------- | --------------------- |
| **Deposit Asset**     | cbBTC                 |
| **Vault Token**       | svBTC (ERC-4626)      |
| **Minimum Deposit**   | $500 USD equivalent   |
| **Management Fee**    | 0%                    |
| **Performance Fee**   | 10% (on profits only) |
| **Redemption Period** | 30 days               |

***

## Risk Factors

| Risk               | Mitigation                                 |
| ------------------ | ------------------------------------------ |
| **Smart Contract** | ERC-4626 standard, audited contracts       |
| **Solver Default** | Collateralization requirements, bonding    |
| **Liquidity**      | 30-day redemption period for orderly exits |
| **Market**         | Yield varies with cross-chain swap volume  |

> **Transparent Operations**
>
> All vault operations are on-chain and verifiable on [BaseScan](https://basescan.org).

***

## Learn More

* [Yield Mechanics](/sova-for-users/strategies/yield-mechanics.md) — Detailed breakdown of fee generation


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