Vaults

Key Features

Types of Vaults

  • Protocol Vault
  • Community Vaults

Vault Parameters

Configurable by the vault owner :

  • Maximum TVL
  • Profit Share (between 0% and 20%)
  • Lockup Period (between 1 and 4 days)

Global Parameters :

  • Minimum Owner Share (5%) : The owner is restricted from withdrawal if that reduces their share below 5%. This increases the performance incentive for the owner

Vault Tokens

When a user invests funds in a vault, this will trigger minting Vault Tokens for the investor. The user can monitor the price of this asset which depends on the value of the vault and its total supply in tokens.

Currently, vault tokens do not count as collateral and do not contribute to account value since Paradex does not support multi-collateral yet.

Sell into Auxiliary Accounts

The process of selling vault tokens is designed to be efficient and fair by minimising the impact on other users of the vault.

A share of each position of the vault is moved to an auxiliary account for a unwind. This protects other users of the vault from any unwind cost regardless of market conditions and the sold amount.

The unwind process within the auxiliary account tries to minimise slippage for the seller by gradually closing the positions on the market.