Understanding PPS (Price Per Share) Formula
The price per share formula is denoted by:
Where βTβ is the amount of base asset tokens in the vault (strategy LP tokens), βV βis the total amount of 'Vault' tokens in circulation and P is the 'price' of those vault tokens.
At the start, P=1
Thus, V=T, the amount of base asset tokens inside the vault is equal to the amount of Vault Tokens.
By keeping track of the number of Vault Tokens in circulation, and the number of tokens inside the vault (which increase the longer they are held in the vault) the price can be calculated as follows:
Since the amount of Vault tokens is constant relative to the amount of underlying base asset tokens (which increase due to them being deployed in strategies, unless the strategies fail), the price will increase, and a depositor can burn their Vault Tokens to claim their initial deposit and profits.
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