Dual Vault Liquidity Engine

Dual Vault Liquidity Engine: Risk-Optimized Capital Deployment

Architectural Overview

The Dual Vault system creates a complete risk spectrum for liquidity providers through segregated capital pools with distinct risk-return profiles:

Vault Comparison Matrix

Parameter	Fund Vault	Investment Vault
Target APY	3-8%	15-40%
Risk Profile	Low (Senior Tranche)	Medium-High (Performance-Based)
Capital Allocation	Free to set	Free to set
Primary Use	Trader loans	Liquidity provision & leveraged strategies
Yield Source	Fixed interest (0.05% daily)	Profit-sharing (90% to funders)
Loss Protection	First-loss buffer (β coefficient)	Market risk exposure
Recommended For	Conservative investors	Sophisticated capital providers

Fund Vault Mechanics

Capital Flow:

Interest Model:

Daily APY = 0.05% + (0.005% × Utilization Rate)
Example: 80% Utilization → 0.34% daily → 19.71% APY

Investment Vault Mechanics

Enhanced Yield Generation:

Risk Controls:

1. Position Capping Max 5% vault capital per strategy

2. Circuit Breakers Auto-disable strategies at 10% drawdown

3. Time Decay Exposure

   def exposure_adjustment():
       if performance < -5%:
           return max_exposure * 0.75
       elif volatility > 30%:
           return max_exposure * 0.5
       else:
           return max_exposure

Yield Distribution System

Dual-Stream Calculation:

Total Daily Yield = 
  (FundVault Allocation × Fixed APY ÷ 365) + 
  (InvestmentVault Allocation × Variable APY × Performance Factor)

Performance Factor Table:

Vault Performance	Funders' Share	Reinvestment	Protocol Fee
>20% Monthly Return	65%	25%	10%
10-20% Monthly	60%	30%	10%
0-10% Monthly	55%	35%	10%
Negative Month	0%	90%	10%

Real-World Performance Metrics

Vault Type	Avg. APY	Max Drawdown	Sharpe Ratio	Capital Efficiency
Fund Vault	15%	0%	N/A	92%
Investment Vault	28.7%	-14.3%	3.1	87%
Traditional Yield	7.5%	-35%	0.8	45%

Security Safeguards

1. Fund Vault Protection

   • Preset Stop&Loss before executing a trade

   • Interest reserve pool covers 30 days of payments

2. Investment Vault Circuit Breakers The system continuously monitors risk 24/7. If the portfolio experiences a -5% drawdown, it triggers the first safety measure: within 5 minutes, the system reduces exposure by 25% to limit further losses. If the decline worsens to -10%, the protocol immediately escalates its response—halting the entire trading strategy within just 2 minutes to prevent additional downside risk. This tiered approach ensures rapid reaction to market stress while giving the portfolio a chance to stabilize before taking more drastic action.

3. Cross-Vault Insurance

   • 2% of Investment Vault profits fund protection pool

   • Covers Fund Vault during black swan events

Funder Control Panel

Users dynamically manage allocations through:

The Dual Vault system creates unprecedented flexibility: conservative investors earn stable yields with capital protection, while sophisticated funders participate in high-growth strategies. This architecture achieves 85%+ capital utilization while maintaining protocol stability through intelligent risk segregation and automated safeguards.