Vaults are a fundamental component of the DexToro Liquidity ecosystem, allowing liquidity providers (LPs) to deposit collateral and participate in the protocol. Vaults are designed to hold specific collateral types and are linked to pools, which aggregate and allocate liquidity to derivative markets.

Depositing Collateral

LPs can deposit collateral into vaults that have been approved by governance. Each vault is associated with a specific collateral type.

To deposit collateral:

  1. Connect your wallet to the DexToro Liquidity interface or a compatible third-party application

  2. Select the vault corresponding to the collateral type you wish to deposit

  3. Enter the amount of collateral you want to deposit

  4. Confirm the transaction and pay the associated gas fees

Once the transaction is confirmed, your collateral will be securely stored in the vault and can be delegated to pools to earn rewards.

Collateral Types and Risk Parameters

The Dextoro Protocol manages the accepted collateral types and their corresponding risk parameters through DexToro Improvement Proposals (DIPs) or DexToro Configuration Change Proposals (DCCPs).

Risk parameters for each collateral type include:

  • Issuance Ratio: The minimum ratio of collateral value to minted dUSD

  • Liquidation Ratio: The collateralization ratio below which a liquidity position may be liquidated

Vaults and Pools

Each pool in DexToro Liquidity has one vault for each approved collateral type. The pool owner determines the accepted collateral types for their pool.

Key aspects of the vault-pool relationship:

  • Liquidations of individual positions affect only the specific vault, not the entire pool

  • Entire vaults can be liquidated if the aggregate collateral-to-debt ratio falls below the liquidation ratio

  • Pool owners can attach rewards distributors to specific vaults for targeted liquidity incentives

Account Permissions

DexToro Liquidity introduces account permissions, allowing LPs to delegate specific actions to other addresses:

  • ADMIN: Full control over the account, except for transferring ownership

  • WITHDRAW: Ability to withdraw collateral from the account

  • REWARDS: Ability to claim rewards on behalf of the account

  • MINT: Ability to mint dUSD using the account's collateral

  • DELEGATE: Ability to delegate the account's collateral to pools

Note: DEPOSIT and BURN actions are permissionless.

Borrowing dUSD

Vaults offer LPs the option to borrow dUSD against their collateral without direct exposure to active markets, enabling users to access liquidity while maintaining their collateral position.

By understanding the role of vaults, collateral types, risk parameters, and account permissions, LPs can effectively manage their collateral and participate in the DexToro Liquidity ecosystem, earning rewards and supporting the liquidity needs of derivative markets.

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