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The vault serves as the counterparty to all trades made on the platform:
- When traders win (positive PnL), their winnings are received from the vault.
- When traders lose (negative PnL), their losses are sent to the vault.
In exchange, the vault receives a portion of trading fees. These fees are proportionally split into Governance, Developers, and some stay in the vault. (—> Governance, Developers, and Vault).
Under critical situations, the vault starts to create a buffer with those funds, further protecting users' funds and the protocol from future PnL abnormalities. Specifically, a portion of USDC held within the vault will be set aside and will not impact the exchange rate between apUSDC and USDC. This ensures that when depositors decide to withdraw their USDC, there will be a sufficient reserve within the vault to facilitate these withdrawals without any issues. In case the buffer mechanism is employed, we will ensure that our vault liquidity providers are promptly informed.
To better approximate the real collateral ratio, and to minimize risks for the protocol, the vault follows an epoch system for capturing snapshots of open PnL. Open PnL represents the aggregate PnL of all open trades at the time of the snapshot.
Last modified 16d ago