Mechanics
How vaults work.
Mechanics
Zeit PPVs are implemented as a fork and extension of Boring Vaults, retaining the NAV / PPS share-based accounting model and extending it for prediction-market portfolios, roll-based liquidity events, and low-liquidity execution constraints.
This page explains:
what is controlled by the vault manager vs the protocol engine
how impact-aware NAV / PPS is used
how withdrawals are prepared, checked, and settled
how rebalancing and rolling between markets works in practice
Roles and responsibilities
Vault manager (strategy layer)
The vault manager controls strategy and execution, including:
portfolio construction and rebalancing
selling positions before resolution
rolling exposure into new markets as others resolve
preparing liquidity for withdrawals
choosing execution style (limit orders, staged unwinds, TWAP-style execution)
There is no automatic rebalancing logic enforced by the protocol. The manager operates similarly to a traditional fund manager within system constraints.
Protocol engine and contracts (operations layer)
The protocol enforces accounting, lifecycle, and safety mechanics, including:
deposit and withdrawal queues
roll scheduling and freeze windows
impact-aware NAV and PPS computation
minting and burning PPV shares
allocation of collateral for redemptions
forced liquidation fallback, bounded by pro-rata withdrawal size
High Level Architecture
Impact-aware NAV (paper vs executable value)
Prediction-market orderbooks are often thin. A mid-price (“paper”) mark can materially overstate realizable value at size.
For operational decisions, the system uses an impact-aware NAV:
Paper NAV Values positions at a reference price (e.g. mid), ignoring depth.
Impact-aware NAV Estimates position value using live orderbook depth — i.e. what the vault would receive if positions were unwound now, accounting for price impact.
Impact-aware NAV is used to:
determine how much USDC.e must be freed for withdrawals
compute PPS at roll checkpoints for minting, burning, and fee logic
Queues and roll checkpoints
Vaults operate with discrete processing events (“rolls”), consistent with the Boring Vaults share model.
At any time, the engine tracks:
pending deposits (collateral queued for mint)
pending withdrawals (locked shares queued for redemption)
net flow (deposits offsetting withdrawals where possible)
required redemption liquidity in USDC.e, derived from impact-aware NAV / PPS
Withdrawal liquidity workflow
Withdrawals are processed in batches. Managers are given advance visibility and time to reduce market impact.
1. Queue visibility
When a withdrawal is submitted:
shares are locked
the withdrawal queue updates
the engine computes the required USDC.e needed at the next redemption checkpoint
This amount is based on impact-aware valuation, not paper NAV.
2. Manager preparation window
Before the roll:
the manager prepares liquidity intentionally
positions can be reduced or hedged in advance
Typical behavior includes:
unwinding illiquid positions first
reducing exposure gradually
maintaining hedges while de-risking
This mirrors standard fund redemption management in illiquid markets.
3. Pre-roll freeze window
Typically 2–3 hours before a withdrawal checkpoint, the system enforces a freeze window (or stricter execution rules).
Purpose:
stabilize the portfolio state
prevent last-minute changes from invalidating solvency checks
4. Redemption checkpoint
At the roll checkpoint, the engine verifies whether sufficient USDC.e is available.
If sufficient collateral exists:
the required amount is transferred to the redemption adapter
withdrawals become claimable
5. Fallback liquidation (bounded)
If collateral is insufficient:
the system initiates forced liquidation
positions are reduced via batched market sells (e.g. ~10% increments)
liquidation continues until required USDC.e is reached
Guardrail: Forced liquidation is capped to the pro-rata portion of positions corresponding to the shares being withdrawn. The system does not unwind more exposure than required.
Rebalancing and rolling (manager-driven)
Rebalancing
Rebalancing is fully controlled by the vault manager.
Common triggers include:
allocation drift
risk reduction or hedging
liquidity preparation ahead of withdrawal cycles
changes in conviction or market information
There is no protocol-imposed rebalance schedule.
Rolling between markets
Markets resolve or expire. Maintaining perpetual exposure requires rolling into new markets.
Rolling is manager-driven:
closing or reducing positions as markets approach resolution
opening replacement exposure in new markets
exiting positions early if liquidity or risk conditions change
Positions are not required to be held until resolution.
Execution tools
Managers may use execution tooling to reduce slippage and impact, including:
limit orders and staged limits
time-sliced execution (TWAP-style)
unwind helpers as roll checkpoints approach
prioritization of illiquid positions
alerts tied to required redemption liquidity
Tool availability may vary by vault configuration.
Summary
Zeit PPVs are a fork and extension of Boring Vaults adapted for prediction markets.
Managers control strategy, execution, rebalancing, and rolling.
The protocol engine enforces queues, roll checkpoints, valuation, and withdrawal safety rails.
Withdrawals follow a prepare → freeze → check → allocate flow with bounded forced liquidation as a fallback.
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