Original - Odaily
Author - Nan Zhi
The wave of migration to on-chain
During the 2022 bear market, DeFi protocols led by GMX brought a “Real Yield” narrative to the market, providing asustainableof,Stablizeof,high capacityway of income. After the FTX thunderstorm, the importance of decentralization and transparency has attracted more and more attention. Perpetual Contract Derivatives Exchange (Perp DEX) has occupied more and more market shares, and the corresponding protocol revenue and user benefits It has also expanded accordingly, and the wave of migration from CeFi to DeFi has become unstoppable.
Among Perp DEX, GMX occupies a significant leading position. In the past year, GMX protocol revenue was US$132 million, ranking ninth among all projects and ranking first in the derivatives DEX track.
GMX is a DeFi protocol on Arbitrum that allows liquidity providers (LPs) to deposit funds and provide leverage to perpetual contract traders, who then conduct on-chain transactions with the funds they provide.
Traders: In GMX V1, traders need to pay transaction fees and borrowing fees, while in V2, funding rates and price impact fees have been added.
Liquidity Provider (LP): Relative to traders, the other party participating in the agreement is called a liquidity provider. LP invests a series of tokens to provide liquidity to traders and obtains revenue from its transaction fees. The liquidity it provides is GLP in V1 and GM tokens in V2.
To put it simply, for the expected value (EV) of a traders profit and loss, assuming that the profit and loss and winning rate are both 50-50, the average EV of the traders profit and loss is zero. If fees are taken into account, the traders counterparty EV in a zero-sum game is positive. Although some traders can make substantial profits, after expanding the scope to all traders, the ones that can really make sustained profits are their counterparties-liquidity providers.
GLP, the money printing machine that travels through the bull and bear market
GLP is a product composed of a basket of tokens, including non-stable coins such as ETH and BTC, accounting for about 60%, and stable coins including USDC, USDT, etc., accounting for 40%.
Ongoing income:GLPs APR data for the past year is shown in the chart below, and it has continued to generate cash flow income for GLP holders even during bear markets. Its average annualized APR reaches 18%. Whether compared to the 4.6% of ten-year U.S. bonds or the 4% ETH POS pledge income, the income from GLP is relatively considerable and stable.
Stable underlying assets:As mentioned earlier, stablecoin assets account for 40% of GLP, while among non-stable assets, BTC accounts for 30% and ETH accounts for 26.8%, forming a stable underlying asset portfolio. Its performance in the past year The price is as shown in the figure below. On the one hand, the overall asset trend is upward and there is no significant retracement. On the other hand, as it is heading towards a bull market, BTC, as the pioneer of the bull market, has the possibility of continuing to rise.
However, GLP will face the counterparty risk caused by the imbalance of open positions (OI), as well as the problem of too few trading varieties. GMX launched the V2 version in August this year, using GM tokens as a liquidity pool to achieve independent risk control and expand trading assets. For LPs, they can also select exposures based on risk appetite/return expectations.
Vaultka Product Matrix
After GMX opened up a simple and stable profit model for the market, a series of GMX model Perp DEX competing products have also emerged on the market. Well-known protocols include Gains Network, MUX Protocol, HMX, etc. Faced with a wide range of similar products, investors have created various demands, including compound interest and improvement of GMX returns, and further management and control of its stability. Vaultka came into being and created a comprehensive and rich derivative strategy matrix for Perp DEX through comprehensive horizontal expansion and deep vertical division. Its TVL increased three times and exceeded 10 million US dollars last month:
Horizontal system: Covers Arbitrum’s popular Perp DEX protocol, and will soon launch index products to meet investors’ protocol needs with different characteristics.
Vertical system: Provides a series of products with different risk preferences, and subdivides investors under each product to meet multi-level risk preference needs.
GLP/GM Policy Vault
As mentioned earlier, liquidity providers will continue to profit from traders transactions, with the average APR of GLP over the past year reaching 18%, and GLPs maximum drawdown being approximately 7%.
At the time of the bull-bear transition, on the one hand, users hope to improve the profitability of their underlying assets. At the same time, with the cessation of interest rate hikes and expectations of interest rate cuts by the Federal Reserve, expectations for rising risk assets have increased, and investorsThe requirements for risk interest rates will also further increase。
Vaultka’s GLP/GM leverage strategy meets this demand of investors:
Users can use stablecoins such as USDC and USDT as the investment principal. The protocol will lend assets from the Lending module according to the leverage selected by the user, and then mint GLP or GM. The protocol will regularly receive the revenue share of GLP/GM for Vaultka users. Collect anytime.
Vaultkas Lending module adopts a revenue sharing model. Users do not pay floating loan interest rates but share the underlying protocol revenue in proportion, achieving a win-win situation for both borrowers and lenders. Lendings isolation pool design ensures the safety of lenders funds.
The users rate of return is directly related to the multiple of leverage. As of November 14, Vaultka official website data shows that under a 10x multiplier, the APR of the three GM pools including ARB, ETH, and BTC reached 250%, 166%, and 166% respectively. 153%, and the APR corresponding to GLP also reached 108%.
Judging from the GLP price review data in the past year, the leverage multiple provided by Vaultka has a certain safety margin. Investors can choose the multiple based on their expectations for the market outlook and risk preference to meet the risk interest rate needs and help the underlying assets and Double improvement in profitability.
market neutral strategy
As part of the vertical product system, Vaultka also provides investors with market-neutral strategies, uses leveraged funds to hedge risks, and provides investment avenues for prudent investors.
As mentioned above, GLP/GM are composed of non-stable coins, which is the first layer faced by users.Underlying Asset Fluctuation Risk, on the other hand, as traders’ counterparties, users will also face the consequences of unbalanced open positions (OI).“Counterparty risk”。
In this regard, Vaultka provides a GLP-neutral strategy based on hedging. Through a reputable lending agreement, hedging is done by shorting BTC and ETH according to the corresponding weight in GLP. Through continuous backtesting and simulation, Vaultka determines dynamic rebalancing points based on GMX traders long/short positions to further stabilize the equity value of the product and meet low-risk investment needs.
also,Vaultka also recently disclosed the GM leverage neutral strategy for ETH and ARB, through the combination structure of leveraged borrowing, dual currency + hedging, the risk of underlying asset fluctuations is eliminated. No matter how the prices of ETH and ARB change, it will not affect the value of the investment portfolio. Under a stable structure, the profitability of users will be continuously enlarged.
Lending module - revenue sharing
In other leverage strategy protocols, users often have aPain point - borrowing interest rates fluctuate and are difficult to predict, causing leverage to often fail:
Such agreements usually adopt an interest rate double-line model. Before the critical point of the borrowing utilization rate (UR), the interest rate rises at a low rate, and after breaking through the critical point, the interest rate increases sharply.
In the case of GLP/GMs APR>Lending Interest Rate, users will usually continue to increase leverage, causing UR to rise rapidly, thus making APR<Lending Interest Rate.
The above situation makes leverage unprofitable. Users start to reduce leverage and start to increase leverage again after the data reverses. This process is constantly cycled according to GLPs APR, and returns fluctuate repeatedly and are difficult to predict.
In this regard, Vaultka designed a revenue sharing model in the Lending module to solve this problem. What strategic vault users pay to lenders is not a floating interest rate, but a double-line revenue sharing, and the lending interest rate will not fluctuate at the APR critical point. The situation makes the leverage of strategic vaults profitable under all URs, unleashing the potential of leveraged investment.
On the other hand, the parameters of this model have been preset and are positively related to the users leverage multiple. Users can more clearly calculate the leverage cost they need to pay, reducing gaming costs and helping to clarify each risk preference. cost considerations.
In summary, the Lending module designed by Vaultka allows GLP/GM leveraged investors to onlyFocus on investment targets and strategies themselves, assisting the decision-making, use and profit of leverage strategies.
So far, Vaultka has created four strategic products vertically to fully meet the needs of users in market segments: ①Risk aversion-Lending lenders, ②Risk-free preference-GLP neutral strategy, ③Low-risk investment-leverage neutral strategy, ④ Free Choice - Leverage Strategies.
Other Strategies Vault
Horizontally, Vaultka also covers multiple Arbitrum popular protocols, providing users with optional leverage strategies:
HLP：HLP is the liquidity provider of HMX. After users deposit their assets into GMX to cast GLP, they then deposit GLP into HMX as a liquidity provider and enjoy the dual transaction fee income of GMX and HMX. The characteristics of HLP are similar to GLP, with the characteristics of sustained profitability and low drawdown. Its price is shown in the figure below.
VLP：VLP is the liquidity provider of Vela Exchange and can only be minted through USDC. It can be considered a delta-neutral product. Due to its single-asset characteristics, the liquidation scenario is controllable and the risk-taking ability is easy to foresee.
gDAI：gDAI is the liquidity provider of Gains Network. Users use DAI to mortgage and then mint gDAI on the platform. gDAI has the characteristics of eternal rise and is also a neutral product.
The above multiple strategic products have different asset characteristics and yields. Through comprehensive coverage and linking to the Vaultka Lending module, users can freely choose according to their individual investment needs.
Detailed explanation of Lending module
In the lending module, Vaultka adopts a revenue sharing model and a revenue prepayment model. The former allows lenders to increase their return on funds based on market conditions, and the latter ensures the stability and predictability of revenue.
revenue share model
As mentioned earlier, the income sharing model solves the problem of borrowers’ leverage effectiveness, and for lenders, this model also brings many advantages:
Earnings can be improved: Under this model, the higher the leverage used by the borrower, the higher the share rate (30% under 2 times leverage, 37.5% under 5 times leverage, with a linear increase in the middle).The lender’s actual capital efficiency and yield will be higher. And the APR increase of the underlying protocol will also be fed back to the lender’s income.
The trading volume expected to rise in the market will bringAPRimprovement, as well as the enhancement of borrower confidence, further promotingLeverage amountandLeverageincrease, thereby achieving a triple increase in revenue.
Zero lending interest: Borrowers enjoy zero lending interest, and reward sharing will only be triggered when positive returns are generated from closing positions.
Asset Security: Lenders’ positions are protected with no downside risk and losses will be borne by reserve and leverage users.
revenue advance model
Vaultka divides the lenders income into a base reward (Base Reward) and an additional reward (Bonus Reward). The base reward is calculated from the total income of the previous quarter, and the additional reward will be adjusted and calculated from the total income of the previous week.
The model ensures that lenders can predict future returns with certainty and that the rewards lenders receive will never fall below the stated expected amount, only increase.
In addition to the features above, Vaultkas unique Lending vaults are tailored for each specific strategic vault, effectively isolating and managing the risks associated with each individual vault. And allocate esVKA rewards to lenders, and develop together with the platform to gain profits.
On October 19, the Vaultka platform token $VKA TGE was completed, raising 2,583 ETH, which was 7.9 times the initial target.
The total supply of VKA tokens is 100 million, of which private placement and public sales account for 13%, airdrops account for 5%, and teams account for 15%. The remaining 67% is used for various ecological development purposes. The distribution details are as follows Show:
Token use cases
The VKA token has multiple use cases including:
Reward enhancement: Staking VKA can get 2.5 times the reward released by esVKA. The boost rewards each user receives will be based on a weighted ratio of their deposits to the total liquidity weight of the pool, as well as the total amount of esVKA issued to the Vault.
Protocol fee sharing: By staking VKA or esVKA, stakers receive 60% of the protocol revenue, including a 15% strategic vault management fee and a 0.2% withdrawal fee. esVELA and esHMX will also be allocated as fees. esTokens will be vested and collected by Vaultka from the underlying protocol every two weeks. In addition, stakers are also eligible to receive additional allocations from esVKA.
Income voting rights: VKA stakers can also participate in Vault emission distribution every week and receive bribery fees from the protocol.
In addition, Vaultka will repurchase and destroy VKA through protocol revenue, and the reduced portion of esVKA released in advance will also be destroyed.
As shown in Token Economics, 42% of the tokens will be emitted in the form of esVKA, and esVKA staking enjoys the same benefits as VKA staking, including 2.5x release rewards, protocol fee sharing, income voting rights, etc. Users can also choose to convert their esVKA to VKA, which is divided into 1 year of full release or 90 days of early release (50% reduction in quantity)
The bull market is about to start, and it’s time to snowball
Vaultkas product matrix is still developing. In the follow-up planning, Vaultka will further expand the system, launch the Cocktail series (comprehensive investment in LP and governance tokens), and incorporate more protocols and tokens to provide investors with a comprehensive , products that are easy to make decisions and operate.
Compared with the traditional derivatives market, the trading volume of the Perp DEX market is still very small. As its official stated, Vaultka firmly believes in the potential of the Perp DEX market and will actively participate in and promote the growth of this rapidly expanding market with its comprehensive and in-depth The product system has rolled a continuous cash flow snowball on the long slope of Perp DEX.