Vault

Security without custody.

Table of Contents

    • Security without custody.

      The Deepwaters vault is the component of our ecosystem that provides functionality for staking and liquidity provision.

      Liquidity pools in the current landscape of decentralized finance suffer from two primary issues: capital is sitting idle and unused, and the invariant price model causes impermanent loss. Uniswap V3 has proven the theory that concentrated liquidity increases the efficiency of capital in liquidity pools, however it has also increased impermanent loss on Uniswap. Crucially, Uniswap has failed to protect liquidity providers during periods of high volatility.

    • A Quantum Leap in Liquidity Provision

      Deepwaters expands on the model pioneered by Uniswap, with single-sided depositing along with established rate limits that protect users from adverse returns during periods of extreme volatility. This significantly reduces impermanent loss while also concentrating deposited liquidity. The process of liquidity provision in the Deepwaters value functions as follows:

      1. Users will make a single-sided deposit, providing the following information:

        1. Primary asset to deposit.

        2. Amount and size of that primary asset deposit.

        3. Secondary asset(s) with which the primary asset can be rebalanced.

      2. In addition to specifying secondary assets, users will need to specify the percentage ceiling of their primary asset that they are willing to be rebalanced into the secondary asset (rate limit) along with the period of time that this can take place (time duration).

      3. Lastly, users may choose to automatically pause (cooldown) their position for a specified amount of time when the rate limit is reached.

      The purpose of the rate-limit and time duration features described above are to protect users from adverse returns during periods of high volatility. Additionally, only positions for ‘active’ pairs will be used for order matching, thus concentrating the liquidity and increasing the efficiency of the whole pool.

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