Synthetic Vaults
The Synthetic Vaults dApp provides access to cross-chain LP provisioning yields from any chain through a subset of Internal DEXes on each chain within the Entangle Framework.
Synthetic Vaults are Liquid Staking Derivatives minted 1:1 based on held Liquidity Pool Vaults on another chain, where prices of Synthetic Vaults are pegged to the underlying Liquidity Pool Vaults.
Synthetic Vaults can be representations of underlying Liquidity Pool Vaults such as
- Liquidity Pools on DEXes (for example AVAX/USDC pair on TraderJoe)
- Lending & Borrowing Pools (for example USDC lending & borrowing pool on AAVE)
- Staked Tokens (for example staked stETH)
The amount of Synthetic Vaults are "finite", meaning that even if the amount of Liquidity Pool Vault Tokens rises in amount due to auto-compounding, no new Synthetic Vaults Tokens are minted.
Additional Synthetic Vault Tokens can only be minted on the base of additional new Liquidity Pool Vaults Tokens obtained.
Synthetic Vaults benefits protocols and users with a number of use-cases
- Protocols can attract liquidity from users on chains previously inaccessible
- Sticky & Loyal Liquidity through users collateralizing Synthetic Vaults for secondary usescases, such as staking to derivatives protocols
Users can
- Deposit into any desired Liquidity Pool Vault on any Chain from any Chain in one click
- Save time on auto-compounding, and skip multitudes of transactions, bridges and fees
- Earn LP fees through the price-accrual of Synthetic Vaults
- Achieve Capital Efficiency:
- 1.Synthetic Vaults can be staked to derivatives protocols
- 2.Provide Synthetic Vaults to lending & borrowing protocols
An example is explored to showcase how Synthetic Vaults work:
Given
- Entangle has minted 100 Synthetic Vaults (AVAX/USDC.e) on Internal DEX on ETH based upon 100 AVAX/USDC.e LP Tokens obtained on AVAX from TraderJoe.
- 1.An ETH user purchases 100 Synthetic Vaults (AVAX/USDC.e) with USDC through the Internal DEX.
- 2.The user now has 100 Synthetic Vaults (AVAX/USDC.e) accruing value reflected by the underlying Liquidity Pool Vault, 100 AVAX/USDC.e LP Tokens on TraderJoe on AVAX.
- 3.The ETH user can now:
- Continuously be exposed to the yield of 100 AVAX/USDC.e LP Tokens or sell them back through the Internal DEX to USDC
- Recycle Synthetic Vaults for derivatives protocols such as perpetuals or options protocols
- Use Synthetic Vaults as collateral to borrow other assets
The user gains additional sources of revenue in form of emissions from Derivatives protocols tokens in return for provided liquidity.
Through capital efficiency options for the end-user, Entangle achieves sticky liquidity for TraderJoe and increased TVL for derivatives protocols, additionally allowing them to issue products based on cross-chain liquidity.
All Liquidity Pool Vaults must have a successful external audit as a requirement to be issued as Synthetic Vault.
Last modified 5d ago