Epochs

PublicVaults operate around a time-based epoch system. An epoch length is defined by the strategist that deploys the PublicVault. The duration of new loans is restricted to not exceed the end of the next epoch. For example, if a PublicVault is 15 days into a 30-day epoch, new loans must not be longer than 45 days.

Epochs are also used to restrict withdrawals of liquidity providers. Liquidity providers must signal that they wish to remove their capital at least one epoch in advance. When they wish to do this, they burn their VaultTokens and receive WithdrawTokens (see WithdrawProxy) in return. That liquidity provider then continues to earn yield until the beginning of the next epoch, at which point the PublicVault computes the value of their burned shares. New loan originations are then frozen until the PublicVault has recovered enough capital to repay all withdrawing liquidity providers.

If any liquidation auctions are occuring during an epoch boundary, recovered funds are split proportionally between the PublicVault and withdrawing liquidity providers, according to the value of their shares at the epoch boundary. This ensures that liquidity providers are not penalized or unfairly rewarded for timing their exit according to active liquidations.