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Vault Specs

Actively Managed ETH-USDC Vault on Camelot v3

1. Introduction

  • An actively managed vault that manages liquidity across three ranges for the ETH-USDC pair to optimize yields while minimizing impermanent loss.

2. Core Features

2.1. Liquidity Management
  • Concentration: Liquidity will be concentrated within three ranges to optimize for frequent price movements.
  • Rebalancing: The vault will actively monitor price movements and adjust liquidity ranges to ensure they remain optimized.
2.2. Fee Collection
  • Automatic: Fees accrued from providing liquidity are automatically collected.
  • Redistribution: Fees are converted and distributed to vault participants based on their share.

3. Active Ranges

  1. 1.
    Near Range: Covering small price fluctuations, optimized for the most frequent price movements.
  2. 2.
    Medium Range: Covering moderate price fluctuations, balancing yield and capital utilization.
  3. 3.
    Far Range: Covering major price swings, acting as a safeguard and capturing larger market moves.

4. Mechanism

  1. 1.
    Entry/Exit: Users can deposit ETH and USDC into the vault. Upon exit, they receive their principal plus any accrued yield.
  2. 2.
    Rebalancing Algorithm: An algorithm will periodically analyze price trends and volatility to adjust the ranges. This might include:
  • Price oracles for accurate price data.
  • Historical data analysis for determining price movement patterns.
  • The frequency of rebalancing can be set (e.g., daily, weekly) based on optimization results and gas considerations.
  1. 3.
    Emergency Withdraw: In extreme market conditions, the vault should be able to halt new deposits and allow for emergency withdrawals.

5. Security

  1. 1.
    Audits: The vault's smart contracts should undergo rigorous security audits from reputable firms.
  2. 2.
    Admin Keys: Multisig governance for any admin functionalities.
  3. 3.
    Oracle Reliability: Multiple price oracles to prevent single points of failure.

6. User Interface

  1. 1.
    Dashboard: A clear dashboard showing the current liquidity distribution across ranges, accrued fees, and user's share.
  2. 2.
    Historical Data: Graphs to depict historical performance, yields, and rebalancing actions.
  3. 3.
    Transaction History: Users can view their deposit, withdrawal, and reward claim transactions.

7. Fee Structure

  1. 1.
    Performance Fee: A percentage of the yield (e.g., 10%) taken as a performance fee.
  2. 2.
    Withdrawal Fee: A small fee (e.g., 0.5%) for withdrawals to cover gas costs and discourage frequent exits.
  3. 3.
    No Deposit Fee: To encourage liquidity provision.