> ## Documentation Index
> Fetch the complete documentation index at: https://docs.saffron.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Overview

> How Saffron Vaults Work

Saffron Fixed Income Vaults enable zero-coupon swaps on Uniswap V3 liquidity positions. The fixed side provides liquidity and sells their future trading fees for a guaranteed upfront payment. The variable side pays this premium, speculating that the yield earned will exceed their cost.

### Participants

* **Fixed side** — Provides token0 and token1 to mint a Uniswap V3 position. Receives a guaranteed premium upfront instead of uncertain trading fees. Limited to one depositor per vault

* **Variable side** — Pays the premium in exchange for all trading fees generated during the vault's duration. Multiple depositors can participate, sharing yield proportionally

### Vault Mechanics

A typical vault lifecycle consists of:

1. A vault is created with configured duration, capacities, and pool parameters
2. The fixed side deposits token0 and token1, minting a Uniswap V3 position
3. The variable side deposits the premium amount
4. Once both sides reach capacity, the vault starts automatically
5. The fixed side calls `claim()` to receive their premium
6. The Uniswap position earns trading fees for the configured duration
7. After maturity, the fixed side withdraws their original liquidity (token0/token1)
8. The variable side withdraws all accumulated trading fees

### Hypothetical Example

**Fixed side:**

* \$1,000,000 WETH/USDC LP position
* 1 year lock duration
* 20% fixed APR (\$200,000 paid upfront)

**Variable side:**

* \$200,000 premium payment
* Exclusive rights to all trading fees from the \$1,000,000 position

**Outcome:**

* Assume 40% APY on the WETH/USDC position
* Variable side earns 400,000 USDC in trading fees
* Net profit: 200,000 USDC (100% return on premium)

### Vault Parameters

Vaults are configured with the following parameters:

* **Duration** — lock period for the vault
* **Fixed Capacity** — target liquidity amount for the Uniswap V3 position
* **Variable Capacity** — total premium required from variable side depositors
* **Variable Asset** — token used for premium payments
* **Fee** — protocol fee (set at factory level, locked at initialization)
* **Pool** — the Uniswap V3 pool for liquidity provision
* **Tick Range** — price bounds for the LP position

The combination of duration and capacities determines the fixed APR. Any standard ERC20 token can be used as the variable asset. Non-standard tokens (fee-on-transfer, rebasing, etc.) are not supported.