# ➤ ESPN Depositors

You want steady yield from ETH volatility without taking a directional bet on price. ESPN is an ERC-4626 vault that does this for you — deposit USDS, hold ESPN, and the vault sells options to generate returns.

<figure><img src="/files/nM333LjuXQxdhgSMuFJn" alt=""><figcaption></figcaption></figure>

## How ESPN Works

ESPN converts deposited USDS into ETH, bonds it with ETH Strategy to receive long-dated convertible notes (which include embedded call options), then sells short-dated call options on Derive to extract yield. The long/short option pairing keeps the strategy balanced in USD terms.

Think of it as: **the volatility trade, productized.** Options desks have profited from this trade for decades — ESPN transforms it into a single token.

**Deep dive:** [About ESPN](/espn/espn.md) · [Derive Options](/espn/derive-options.md)

## Getting Started

### Deposit

1. Approve USDS spending to the ESPN contract
2. Call `deposit()` with your USDS amount
3. Receive ESPN shares (starting price: 100 USDS per ESPN)

The mint price increases as yield accrues — later depositors pay a higher price per share, reflecting the yield already accrued by the vault.

ESPN minting is capped. Check `maxDeposit()` for current remaining capacity.

### Earn

Hold ESPN. Yield accrues automatically as option premiums flow into the vault, increasing the USDS value each ESPN can be redeemed for. No claiming or compounding required.

### Boost (Optional)

Provide liquidity to the ESPN/USDS pool via Arrakis and stake LP tokens for additional incentives based on lock duration.

**Deep dive:** [Staking Incentives](/espn/staking-incentives.md)

### Redeem

* **Instant:** When the vault has sufficient liquid USDS, call `redeem()` or `withdraw()` directly
* **Queue:** When liquidity is tied up in options positions, join the redemption queue — you receive an NFT representing your position, redeemable when eligible

The queue preserves your dollar value. You don't earn additional yield while queued, but you don't lose value either.

**Deep dive:** [ESPN Quick Start](/espn/quick-start.md)

## Key Risks

* ESPN yield depends on ETH volatility and options market conditions — low-volatility periods produce lower returns
* Options positions may create temporary illiquidity, requiring the redemption queue
* ESPN is exposed to Derive counterparty risk for the options leg
* USD-balanced strategy can still produce losses in extreme market conditions
* Smart contract risk across ESPN, the bonding mechanism, and the Derive bridge

**Full breakdown:** [ESPN Risks](/espn/risks.md) · [Protocol Risks](/security-and-risk/risks.md)

## Your Reading Path

1. [About ESPN](/espn/espn.md) — the strategy, the trade, and how the vault works
2. [ESPN Quick Start](/espn/quick-start.md) — minting, earning, redeeming, contract addresses
3. [Derive Options](/espn/derive-options.md) — how options are sold and managed
4. [ESPN Risks](/espn/risks.md) — specific risk factors for the vault
5. [Staking Incentives](/espn/staking-incentives.md) — optional LP staking for boosted yield


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