Smart Withdrawal
Smart withdrawal is a new way of exiting leveraged yield strategies that minimizes the costs and risks with unwinding a highly leveraged position.
Smart withdrawal allows users to redeem staked tokens held as collateral (ex. sUSDe) for their withdrawal tokens (ex. USDe) without exiting their leveraged yield positions first.
Once smart withdrawal is complete, the user can convert the withdrawal token back to the borrow token to pay off their debts and return their principal + profit.
Benefits
No transaction cost on exit. Redeem your staked assets for free instead of market selling them and paying fees.
No selling your collateral below its redemption value. Staked tokens often trade at a discount to their redemption value. Smart withdrawal allows you to exit your position at the full redemption value of your collateral.
Don't need to worry about yield token liquidity. Large leveraged yield positions are very sensitive to yield token liquidity. Smart withdrawal allows users to exit without trading, so liquidity for the yield token is not important.
How it works
Initiate smart withdrawal. Notional Exponent will transfer your yield tokens to the issuing protocol and receive a withdrawal request on your behalf.
Wait for redemption to finalize. Once you initiate smart withdrawal, your account is locked until your withdrawal request can be redeemed for tokens from the issuing protocol. During this time, you will stop earning yield on your vault shares but will continue to pay interest on your debt.
Exit. Notional Exponent will redeem your withdrawal request for the withdrawal tokens, convert those tokens to the borrowed token, repay your debt, and return your principal + profit.
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