Tokenised Vaults

1. Overview

Tokenised vaults are a core liquidity primitive for Defx. Here's what they do:

• Vaults hold capital and run defined strategies across money markets, LSTs, LP tokens, and perp markets.

• Each vault is tokenised into a fungible yield bearing token that represents proportional claim on the vault’s NAV.

• Vaults can be managed by Defx and approved managers.

Example

1. A user deposits USDC into the USD Liquidity Provider Vault on Ethereum.

2. The vault mints Yield Bearing Tokens (e.g. dlpUSD) to the user's wallet, representing a proportional claim on the vault’s assets.

3. The vault’s strategy uses integrated adaptors to open and manage positions across multiple venues and DeFi protocols (for example: long/short, basis, delta-neutral, liquidity provision, LSTs).

4. PnL and funding from those positions accrue back into the vault, increasing or decreasing the vault’s net asset value (NAV).

5. The Yield Bearing Token’s price moves with the vault NAV – if the strategy makes money, each token is worth more underlying; if it loses, each token is worth less.

6. When the user wants to exit, they submit a redemption request. The vault fetches liquidity from the contracts and adaptors, then makes the underlying claimable instantly or with a time delay, depending on the configuration of the vault.

2. What is a Tokenised Vault?

A tokenised vault is both:

1. A strategy

   • Defines what assets the vault holds and what the vault trades. Strategies could include:

     • Market making

     • Directional or delta-neutral strategies

     • Funding / basis capture

   • Operates within risk parameters.

2. A smart contract system

   • Holds the underlying asset.

   • Mints / burns a Yield Bearing Token (YBT) when users enter or exit.

   • Routes capital between:

     • On-contract capital, and

     • Adaptors connected to DeFi protocols, spot markets, perp DEXs, Off-Exchange Settlement (OES) solutions

All Yield Bearing Tokens are fungible ERC-20 assets:

Yield Bearing Token = share of vault NAV

Token price ≈ Vault NAV / Total Yield Bearing Token Supply

3. Key Components

a. Vault & Yield Bearing Tokens (YBT)

• Users deposit underlying (e.g. USDC, ETH, BTC) into the Vault contract.

• The vault mints a Yield Bearing Token (YBT) to the user in return.

• Yield isn’t paid out as separate rewards – it’s captured as an increase in the exchange rate between the YBT and the underlying.

b. Adaptors

• Adaptors are connectors to DeFi protocols, perp DEXs, and OES solutions. They’re execution pipes and strictly pass through accounts, not new trust anchors.

• Vault contracts use adaptors to talk to different money markets, AMMs, perp DEXs and OES's in a standardized way.

• The vault manager decides how much capital to allocate to each adaptor based on the strategy.

• Adaptors do not custody user funds beyond what’s required for margin and settlement.

c. Asynchronous Redemptions

To ensure every strategy and adaptor works reliably, redemptions are asynchronous rather than instant:

1. Request

   • User burns YBT and creates a liability in underlying terms (e.g. “vault owes me 100 USDC”).

   • The request is placed in a queue.

2. Processing

   • A manager/keeper batches queued requests, recalls liquidity from:

     • On-contract capital, and

     • Multiple adaptors (by closing or reducing positions).

   • Funds in queue are moved into a separate settlement buffer (silo), isolated from ongoing capital movement and PnL.

3. Claim

   • After a cooldown period, the user can claim their underlying from the settlement buffer.

This design keeps the vault always efficient, while allowing strategies to run with longer duration positions without being forced to unwind instantly.

4. How Capital Moves Onchain

You can think of the vault as a capital router for DeFi, LP, spot, and perp positions:

1. Deposit

   • User deposits collateral → receives YBT.

   • Vault updates its accounting index to prevent front-running around pending yield.

2. Allocation

   • The vault keeps a configurable pool of capital on-contract.

   • The remaining capital is allocated to adaptors according to the chosen strategy set by the manager of the vault

3. Accounting

   • All PnL and funding flow back into the vault.

   • The vault NAV and YBT exchange rate are updated over time, with contributed yield and PNL changing the price of the YBT vs the base asset.

4. Redemption

   • When users exit, their redemptions are honoured from:

     • On-contract capital, and

     • Recalled capital from adaptors.

5. Supported Chains & Protocols

Chains:

• Ethereum

• Base

• Arbitrum One

• Polygon PoS

Approved Protocols:

• Perp protocols - Defx, Lighter, HyperLiquid

• AMMs - Aerodrome, Uniswap

• Lending - Aave, Morpho, Pendle

• OES (Off-Exchange Settlement) Providers - Copper, Ceffu

• OES supported CEXs - Binance, ByBit, OKX

6. Summary

• Deposit collateral → receive Yield Bearing Token onchain.

• Take on strategy, market, and venue risk in exchange for potential yield.

• Exit via the redemption queue or secondary markets via AMM pools.