Vault Actions

Prerequisites

Make sure you've set up and connected your wallet on the Monad network. You can interact with the vaults directly through the vaults interface or by using the contract API.

Deposit

Click on Deposit, then select an asset and an amount to deposit into the vault.

By depositing in a single collateral vault, you'll only be exposed to trading P/L and fees in that collateral asset. To receive exposure to trading activity across collateral assets, you can split your deposit across the MON and USDC pools.

Withdraw

Click on Withdraw, then select an asset and an amount to withdraw from the vault.

You can withdraw funds from a vault at any time after a cooldown period has passed since your last deposit (usually a few minutes).

Potential Fee

The financial health of the liquidity vault is protected by implementing a Stability Fund model and a fee on deposits (optional) and withdrawals. This fee is directly correlated to the UPL of the traders in the vault. The deposit fee (if activated) is 0% if the UPL is positive, while the withdrawal fee is 0% if the UPL is negative.

Deposit Fee

When a trader makes a deposit, and if the deposit fee is activated, a fee may be deducted from the deposited amount if the vault has an overall unrealized loss. This deposit fee is calculated according to the following formula: IF (globalUPL - bufferBalance < 0)

$Deposit Fee= BPSDIVIDER * (bufferBalance - globalUPL) / (poolBalance + amount)$

The purpose of this fee is to discourage opportunistic behavior by new participants who contribute funds to the pool during periods of high unrealized losses and benefit from subsequent liquidations or profit recoveries without having shared in the risk when the losses occurred.

Withdrawal Fee

IF (globalUPL - bufferBalance > 0)

$Withdrawal Fee= BPSDIVIDER * (globalUPL - bufferBalance) / (poolBalance + amount)$

Similarly, a withdrawal fee is charged when traders attempt to withdraw funds while in a state of unrealized profit. This fee ensures that participants do not leave the pool, leaving others to bear the unrealized losses. The fee on withdrawals is set in such a way that it proportionally affects those in profit, thus discouraging premature or strategically timed withdrawals.

Purpose of the Fee Mechanism

• Protection against gaming the system: The fee mechanism acts as a deterrent against attempts to exploit fluctuations in the liquidity pool for personal gain at the expense of the health of the pool.

• Risk and reward sharing: It ensures that the risk and potential rewards of participating in the liquidity pool are shared more equitably among all pool members.

• Stability in Pool Health: By discouraging sudden inflows and outflows based on pool performance, the mechanism promotes greater stability in the liquidity available to traders.