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VLP Leverage - SAKE

VLP Leverage has features of:

  1. 1.
    Multiplied rewards from VLP in terms of USDC real yield
  2. 2.
    Dynamic reward split mechanism that SAKE holders pay the leverage cost only when they gain

VLP Leverage Approach

VLP itself can only be minted and redeemed by USDC.e and it does not consist of other crypto assets. Therefore, VLP is considered delta-neutral under the assumption that USDC.e is always pegged at $1.
In Sake Vault, Users can choose USDT, USDC, USDC.e, or DAI for their transactions. When depositing, the vault will seamlessly convert the amount into USDC.e, which is currently the only currency supported by VLP. This conversion process occurs through Kyberswap, guaranteeing users the best price.
In view of the delta-neutral nature, the risk uptake of adding leverage to this type of single-asset Perp DEX LP is limited as the liquidation scenario can be relatively controlled with the single-asset nature.
In SAKE, leveraging is achieved through borrowing extra funding from s-WATER at the cost of reward splitting.

Workflows

Step 1: Users input the deposit amount and choose the desired leverage level (up to 10x).
Step 2: The additional capital required for the leverage strategy is borrowed from the USDC.e lending pool.
Step 3: The borrowed USDC.e is combined with the deposited USDC.e in the VLP Leverage strategy to mint the corresponding VLP tokens on Vela Exchange.
If user is not depositing USDC.e, the deposits will be swapped to USDC.e via Kyberswap to match the borrowings
Step 4: The "Debt-to-Value (DTV) Monitor" and "Liquidation Monitor" continuously monitor the health of the strategy.
Step 5: When the leveraged positions are closed, the rewards are split to the Redistributor, which is a protocol-owned middleman contract that facilitates the distribution of rewards to USDC.e Lending Pool. See here for more details.

Features

Unique Reward Split Mechanism

Leveraged position borrowers benefit from a zero-borrowing interest rate, and the Reward split occurs only when their closed positions have positive earnings. This mechanism ensures lenders' profitability while safeguarding the interests of borrowers.

Flexible Leverage

Users can employ flexible leverage (up to 10x) based on the amount they deposit in the Sake vault. The “Manager” will check the availability of the lending vault and match the leverage amount to mint VLP.

Support of Multiple Stablecoins

Users can choose USDT, USDC, USDC.e, or DAI for their transactions. When depositing, the vault will seamlessly convert the amount into USDC.e, which is currently the only currency supported by VLP. This conversion process occurs through Kyberswap, guaranteeing users the best price.

Lower Withdrawal Fee

To enhance user flexibility, the new $VLP leveraged vault has reduced its withdrawal fee. The fee has been adjusted from 0.5% to 0.2%, enabling users to freely withdraw their positions whenever they want in order to strategize their leveraged position in VLP.