> For the complete documentation index, see [llms.txt](https://veta.gitbook.io/veta-platform-english/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://veta.gitbook.io/veta-platform-english/our-products/enhanced-snowball-snowball-with-upside-participation/payout-scenarios.md). # Payout Scenarios {% hint style="info" %} Investors should familiarize themselves with the four revenue scenarios of VETA's enhanced snowball. The diagram below illustrates the distinct features of these four scenarios. Please refer to [Glossary of Terms](/veta-platform-english/glossary-of-terms.md) for precise definitions of the terms used in each diagram. In the following analysis of revenue scenarios, assuming the example enhanced snowball product has the following parameters: * Principal: $10,000 * Term: 6 months * Monthly knock-out observation, real-time knock-in observation * Underlying asset: BTC * Coupon rate: 12% (annualized) * Participation rate: 50% [#scenario-1-no-knock-in-and-knock-out](#scenario-1-no-knock-in-and-knock-out "mention") [#scenario-2-knock-out](#scenario-2-knock-out "mention") [#scenario-3-no-knock-out-after-knock-in-the-expiration-price-is-lower-than-the-initial-price](#scenario-3-no-knock-out-after-knock-in-the-expiration-price-is-lower-than-the-initial-price "mention") [#scenario-4-no-knock-out-after-knock-in-the-expiration-price-is-higher-than-the-initial-price](#scenario-4-no-knock-out-after-knock-in-the-expiration-price-is-higher-than-the-initial-price "mention") {% endhint %} #### Scenario 1: No knock-in and knock-out > What does this scenario mean? > > At each observation point during the product's operation, the price of the underlying asset has neither exceeded the knock-out price nor fallen below the knock-in price. In the diagram below, for each knock-in/knock-out observation point within the 6-month period, there have been no knock-in or knock-out events for BTC, and investors receive full repayment of the principal and coupon.

{% hint style="info" %} Investor's return: * Coupon interest = $10,000\*12%\*6/12 = $600（6 months） * Remaining principal = $10,000 * Total return = $10,000+$600 = $10,600（6 months） * Rate of return = 6%（6-month absolute return） {% endhint %} #### Scenario 2: Knock-out > What does this scenario mean? > > On one of the knock-out observation days during the product's operation, the price of the underlying asset exceeds the knock-out price. In this case, investors receive the full repayment of the principal and enhanced coupon interest. In the diagram below, on the knock-out observation day in the fourth month, the price of BTC exceeds the knock-out price, resulting in the product being knocked out, and investors receive full repayment of the principal and coupon. Additionally, in the enhanced snowball, In the enhanced snowball, investors also receive an absolute return. This return is calculated by multiplying the knock-out participation rate by the excess increase (the amount by which the price has risen beyond the knock-out price). This return is in addition to the regular coupon interest.

{% hint style="info" %} Investor's return (assuming BTC rises 15% compared to the initial price at knock-out): * Coupon interest = $10,000\*12%\*4/12 = $400（4 months） * Knock-out participation return = $10,000\*(15%-5%)\*50% = $500 * Remaining principal = $10,000 * Total return = $10,000+$500+$400 = $10,900（4 months） * Rate of return = 9%（4-month absolute return） {% endhint %} #### Scenario 3: No knock-out after knock-in; the expiration price is lower than the initial price What does this scenario mean? This scenario happens when the price of the underlying asset falls below the knock-in price and the final price at maturity is also lower than the initial price. In this case, investors bear the loss due to the decline in the underlying asset. In the diagram below, BTC experiences a price below the knock-in price during the product's duration. At the product's maturity, investors need to bear the loss due to the decline in the underlying asset. This is the only scenario where a loss occurs in the Upside Participation Snowball.

Scenario 3: No knock-out after knock-in, the expiration price is lower than the initial price

{% hint style="info" %} Investor's return (assuming a 5% loss in the underlying asset): * Coupon interest = $0（6 months） * Remaining principal = $9,500 * Total return = $9,500（6 months） * Rate of return = -5%（6-month absolute return） {% endhint %} #### Scenario 4: No knock-out after knock-in; the expiration price is higher than the initial price What does this scenario mean? This scenario occurs when the price of the underlying asset drops below the knock-in price. However, by the time of maturity, the price rises again and ends up being higher than the initial price. In this case, investors receive full repayment of the principal but do not earn any coupon interest. In the diagram below, BTC experiences a price below the knock-in price during the product's duration, and it does not knock out at the end. At the product's maturity, investors do not incur any losses, but they also do not receive any coupon interest.

Scenario 4: No knock-out after knock-in, the expiration price is higher than the initial price

{% hint style="info" %} Investor's return: * Coupon interest = $0（6 months） * Remaining principal = $10,000 * Total return = $10,000（6 months） * Rate of return = 0%（6-month absolute return） {% endhint %}