Liquidity Providers

Liquidity Providers mint VT to invest.

These are vault investors, claiming a senior(fixed-rate, protected) position to all instruments attached to the vault. They do so by minting vault shares, where they then gain passive exposure to a wide set of complex strategies for the underlying asset of the vault.

While these are passive investors, they have the ability to fine-tune their exposure levels to an instrument via the AMM. They can participate in the assessment of an instrument via short-selling the instrument’s ZCB(buy shortZCB) in this AMM. This allows them to hedge their exposure to the instrument if it is approved. After the instrument is approved, they can buy either longZCB or shortZCB based on their risk appetite for the instrument. If they buy longZCB they would essentially take a leveraged bet on the approved instrument. If they buy shortZCB they would be hedging against potential losses.

By minting vault shares, Liquidity Providers are exposed to a wide set of complex strategies that are sufficiently risk-priced by managers and provided with first loss capital(insurance)

Benefits for LPs:

1. Set and Forget yield

2. Higher risk-adjusted yields due to the underwriting module

3. Insurance buffer from managers

4. Managed by DeFi natives who are forced to align their incentives with LPs via smart contracts

5. Customizable risk exposures for individual instruments,