Sova Prime

Overview

Sova Prime is the flagship yield vault of the Sova Network. It transforms idle Bitcoin into a productive, yield-bearing asset by allocating deposits into institutional-grade strategies such as delta-neutral funding capture, futures basis trading, and market-neutral lending.

By depositing Bitcoin (or wrapped equivalents like WBTC and cbBTC), users mint spBTC (Sova Prime shares), which represent their proportional claim on the pooled assets and accrued yield. spBTC can be redeemed back for sovaBTC and ultimately for native BTC at any time, subject to vault redemption mechanics.

Vault Structure

• ERC-4626 compliant: spBTC follows the ERC-4626 standard, ensuring compatibility with DeFi protocols, wallets, and integrations.

• Single vault, multi-asset intake: Users can deposit sovaBTC, WBTC, or cbBTC into one canonical vault, simplifying access to yield.

• Pro-rata accounting: Depositors receive spBTC, which tracks their share of both principal and accrued yield.

Yield Strategies

Sova Prime allocates pooled BTC into carefully vetted, market-neutral strategies, including:

• Futures basis trading – capturing spread between spot and futures prices.

• Delta-neutral funding capture – earning from perpetual swap funding rates without directional exposure.

• Institutional lending – secured lending to counterparties under Master Loan Agreements (MLAs) with covenants, collateral, and legal enforcement.

The yield is designed to be high single-digit net APY (~8% target), though results depend on market conditions and strategy performance.

Risk Management

Sova Prime integrates multiple layers of risk controls:

• Master Loan Agreements (MLAs): Each borrowing counterparty is bound by legal contracts specifying use-of-funds, reporting, and remedies in case of default.

• Concentration limits: Caps on exposure per borrower, strategy sleeve, and venue.

• On-chain monitoring: Real-time dashboards track NAV, loan health, and collateral balances.

• Withdrawal safeguards: Time-delayed redemptions and multi-sig custody reduce risks from fraud or operational errors.

• Audits & security: All vault contracts undergo third-party audits; custody partners are qualified and diversified.

Economics

• Yield to depositors: Net APY accrues directly to spBTC holders in the form of share price appreciation.

• Protocol fees: Sova takes a management fee (~100–200 bps) from gross yield, and network fees (bridge + settlement) flow into the treasury.

• Treasury flywheel: Fees are recycled into additional BTC deposits and $SOVA buybacks, compounding value across the network.

Key Benefits

• Institutional-grade yield for anyone: Previously exclusive strategies are now accessible onchain.

• Full transparency: All vault flows, allocations, and yields are reported onchain.

• Liquidity with yield: spBTC can be redeemed or integrated into DeFi markets as collateral.

• Alignment with network growth: As deposits scale, both depositor yield and treasury value grow, reinforcing the Sova flywheel.