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PnL Calculation

Formula​

PnL is computed as the position's notional value change based on entry and exit prices.

For a long position:

pnl=notional×current_price−entry_priceentry_price\text{pnl} = \text{notional} \times \frac{\text{current\_price} - \text{entry\_price}}{\text{entry\_price}}

For a short position:

pnl=notional×entry_price−current_priceentry_price\text{pnl} = \text{notional} \times \frac{\text{entry\_price} - \text{current\_price}}{\text{entry\_price}}

In fixed-point arithmetic:

price_diff = current_price - entry_price    // (long)
price_diff = entry_price - current_price    // (short)

price_change_ratio = price_diff * price_scalar / entry_price   // floor division
pnl = notional * price_change_ratio / price_scalar             // floor division

Where price_scalar = 10^(-exponent). For Pyth's standard exponent of -8, price_scalar = 10^8.

Both divisions use floor rounding (fixed_div_floor, fixed_mul_floor), which slightly favors the vault on rounding errors.

Example​

A 10x long on BTC with 1,000collateral,entryat1,000 collateral, entry at 100,000, close at $110,000:

notional = 10,000 (in token units, e.g., 10,000 USDC)
price_diff = 110,000 - 100,000 = 10,000
price_change_ratio = 10,000 * 100,000,000 / 100,000 = 10,000,000  (= 0.1 in price_scalar)
pnl = 10,000 * 10,000,000 / 100,000,000 = 1,000 USDC

User profit: $1,000 (10% return on notional, 100% return on collateral before fees).

Equity and Payout​

After PnL is computed, equity and payout are derived:

equity=col+pnl−total_fee\text{equity} = \text{col} + \text{pnl} - \text{total\_fee}

Where total_fee = base_fee + impact_fee + funding + borrowing_fee (see Fee System).

The user payout is:

user_payout=max⁡(equity, 0)\text{user\_payout} = \max(\text{equity},\ 0)

If equity is negative, the user receives nothing and the vault absorbs the loss.

Vault Transfer​

The vault transfer represents the net flow between the trading contract and the vault:

vault_transfer=col−user_payout−treasury_fee\text{vault\_transfer} = \text{col} - \text{user\_payout} - \text{treasury\_fee}

A positive vault transfer means the user lost money and the collateral remainder flows to the vault. A negative vault transfer means the user profited and the vault must pay the difference via strategy_withdraw. The treasury fee is protocol_fee * treasury_rate, where protocol_fee = base_fee + impact_fee + borrowing_fee.

ADL Adjustment​

If Auto-Deleveraging has occurred since the position was opened, the position's effective notional is reduced before PnL computation:

effective_notional=notional×current_adl_idxentry_adl_idx\text{effective\_notional} = \text{notional} \times \frac{\text{current\_adl\_idx}}{\text{entry\_adl\_idx}}

This proportionally reduces both the position's profit potential and risk exposure. See Auto-Deleveraging.