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Vault

The Vault

The Vault is the USDT pool that takes the other side of every position. It is owned by TLP holders and is not hedged on any other venue.

The Vault starts at zero with no seed capital. At initialization 1 USDT is deposited and the 1 TLP minted for it is sent to a burn address, so the pool starts at 1 USDT = 1 TLP and the supply can never reach zero.

Initialization
1 USDTdeposited
1 TLPminted for it
Burn addresswhere that 1 TLP sits
1 : 1the pool starts at 1 USDT = 1 TLP
The supply can never reach zero.

The Vault grows when trading losses are credited to it, when USDT is deposited for TLP, and when its share of protocol fees accrues. It shrinks when trading profits are paid out, when TLP is redeemed, and when rebates are minted to losing traders.

Balance and equity

The protocol tracks two measures. Vault balance is the Vault's USDT that can pay profit and redemptions right now. Equity sets TLP's equity per share and the rebate rate.

Vault balance
What can be paid right nowProfit and redemptions are paid from it. Zero while winners are queued.
Equity
What a share is worthSets TLP's equity per share and the rebate rate.

Equity is the Vault's own USDT, minus claims owed to queued winners, minus the open profit and loss of every position facing the Vault. It is not the Vault's USDT balance. Traders' unrealized profits count against equity and their unrealized losses count toward it, so TLP's value moves as positions move, not only when they close. Pricing on open positions is what stops anyone from timing deposits or redemptions around a close; the attacks it prevents are listed in Reference.

Example · how equity is counted
Vault's own USDT
$6.0M− claims owed to queued winners
$0.4M− open profit of positions facing the Vault (net)
$0.6M= equity
$5.0M
Traders' open losses would add to equity instead.

Equity can be negative when traders' open and queued gains exceed the pool.

Vault · 08 / 21

The Vault

The Vault is the USDT pool that takes the other side of every position. It is owned by TLP holders and is not hedged on any other venue.

The Vault starts at zero with no seed capital. At initialization 1 USDT is deposited and the 1 TLP minted for it is sent to a burn address, so the pool starts at 1 USDT = 1 TLP and the supply can never reach zero.

Initialization
deposited1 USDT
minted for it1 TLP
where that 1 TLP sitsBurn address
the pool starts at 1 USDT = 1 TLP1 : 1
The supply can never reach zero.

The Vault grows when trading losses are credited to it, when USDT is deposited for TLP, and when its share of protocol fees accrues. It shrinks when trading profits are paid out, when TLP is redeemed, and when rebates are minted to losing traders.

Balance and equity

The protocol tracks two measures. Vault balance is the Vault's USDT that can pay profit and redemptions right now. Equity sets TLP's equity per share and the rebate rate.

Vault balance
What can be paid right nowProfit and redemptions are paid from it. Zero while winners are queued.
Equity
What a share is worthSets TLP's equity per share and the rebate rate.

Equity is the Vault's own USDT, minus claims owed to queued winners, minus the open profit and loss of every position facing the Vault. It is not the Vault's USDT balance. Traders' unrealized profits count against equity and their unrealized losses count toward it, so TLP's value moves as positions move, not only when they close. Pricing on open positions is what stops anyone from timing deposits or redemptions around a close; the attacks it prevents are listed in Reference.

Example · how equity is counted
Vault's own USDT$6.0M
− claims owed to queued winners$0.4M
− open profit of positions facing the Vault (net)$0.6M
= equity$5.0M
Traders' open losses would add to equity instead.

Equity can be negative when traders' open and queued gains exceed the pool.