Vault

The vault's TVL is currently capped, and the cap will be increased gradually to help preserve APY for depositors.

Vault Business Logic

The Extended Vault quotes across all Extended markets, performs liquidations, and accrues exchange fees. Below is a breakdown of each core activity.

1. Quoting Logic

The vault actively quotes on all markets listed on Extended using an automated market-making strategy. Its quoting behavior is governed by both global and market-specific exposure controls, as well as dynamic capital allocation and spread management logic:

Exposure Management

• Global Exposure Cap: If the vault’s leverage exceeds 0.3x, it will only quote in markets where it already holds exposure, and only on the side that reduces that exposure. This acts as a circuit breaker to prevent excessive leverage.

• Per-Market Exposure Limits: Each market has a hard cap on allowable vault exposure. Less liquid assets have stricter limits to minimize risk from illiquidity.

Quoting Behavior

• Dynamic Size Allocation: The vault adjusts its quoted size (i.e., collateral allocation) across markets based on trading volume distribution on major external venues (CEXs and Hyperliquid). This ensures capital is allocated where liquidity is most needed.

• Adaptive Spread Quoting: Spreads are set dynamically—tightening in stable conditions and widening with volatility—to mitigate adverse selection. Quotes must remain within predefined width constraints to stay eligible for rewards.

• Exposure-Aware Adjustments: The vault adjusts size and spread asymmetrically by side, reducing quoting size and widening the spread on the side that would further increase the vault's exposure.

2. Liquidation Logic

The vault handles all liquidations on the exchange, earning a 1% liquidation fee in cases of healthy liquidations—i.e., when the liquidated position is closed above the bankruptcy price via the order book.

Potential losses to the vault from liquidations—when a position is closed below the bankruptcy price and the vault covers the shortfall—are limited by two controls:

• Per-Market Daily Budget: Each market can only utilize a fraction of the vault’s balance within a 24-hour period. This limit varies by market, with less liquid assets having access to a smaller share of the vault.

• Per-Liquidation Loss Cap: Each market has a hard cap on the maximum absorbable loss per liquidation. Again, less liquid markets have more conservative caps.

If a liquidation breaches either of these limits, the position is automatically ADLed.

Given that the vault is designed to operate with low leverage (see Quoting Logic above), it is highly unlikely to become a counterparty to ADL. Therefore, the vault is not intended to serve as a last-resort backstop for failed liquidations.

3. Fee allocation logic

The vault receives 50% of net fees generated by the exchange. Net fees are defined as:

• Net Fees = Trading Fees – Maker Rebates – Referral Rebates

Additionally, the vault itself accrues maker rebates from its market-making activity.

Vault Deposits & Withdrawals

Vault Deposit & Withdrawal Logic:

• The minimum deposit is $5; there is no minimum withdrawal amount.

• No fees are charged on deposits or withdrawals.

• A 24-hour lockup period applies to each deposit. Withdrawals can only be made 24 hours after each deposit. If a user makes multiple deposits, each one follows its own lockup timeline.

• Upon withdrawal, the vault closes a pro-rata share of its open positions based on the user’s share of total vault equity and transfers the resulting USDC to the user’s account.

• Any price impact from closing positions is borne solely by the withdrawing user and is not shared with other vault participants.