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The Decibel Liquidity Provider (DLP) Vault is a protocol-owned vault that solves the chicken-and-egg problem every new exchange faces: you need liquidity to attract traders, but you need traders to attract liquidity.

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The Bootstrap Problem

New exchanges face a cold start challenge:
  • Traders won’t come without tight spreads and deep books
  • Market makers won’t provide liquidity without trading volume
  • Neither side wants to move first
The DLP Vault breaks this cycle by providing initial liquidity from day one.

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How It Works

The DLP Vault acts as a designated market maker, continuously quoting bid and ask prices across supported markets. It absorbs order flow that would otherwise go unfilled, ensuring traders can always execute at reasonable prices.

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Key Properties

  • Protocol-owned. Not dependent on external market makers staying
  • Algorithmic pricing. Quotes derived from oracle prices with dynamic spreads
  • Risk-managed. Position limits and exposure controls
  • Transparent. All activity visible on-chain

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Backstop Liquidator Role

The DLP Vault also serves as a backstop liquidity provider in the liquidation waterfall. When a position is liquidated and there isn’t enough counterparty liquidity in the orderbook, the DLP steps in to absorb the position — protecting the exchange from bad debt.

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Lockup Period

DLP Vault contributions have a 72-hour lockup period. After contributing, you cannot redeem your shares until 72 hours have passed. This gives the protocol time to deploy your capital effectively and prevents rapid inflows/outflows that could destabilize the market-making strategy.

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Using DLP Shares as Collateral

DLP Vault shares are accepted as trading collateral, so you can keep your DLP exposure while trading perps instead of leaving that capital idle. Shares are priced at vault NAV and count toward your account at 90% credit (a 10% buffer), but only after you enable them: open the Collateral tab, toggle Enable as Collateral on your DLP balance, and acknowledge the risk disclosure. Shares still inside the lockup cannot be pledged. If your account is liquidated while holding DLP collateral, the shares are burned through the vault (their value accrues to the remaining DLP holders) rather than sold on the open market. See Multi-Collateral for the full mechanics.

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Relationship to User Vaults

The DLP Vault uses the same vault infrastructure as user-created vaults, but with special parameters:
Public contributions are live and uncapped. The points-tier deposit cap that once limited how much of your balance you could contribute was removed on 3 June 2026 — you can deposit any amount regardless of your Amps tier.

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Learn More

How Vaults Work

Understanding the vault system and interval-based fees

Vault Integration Guide

Step-by-step guide to creating and managing your own vault

Multi-Collateral

Using DLP shares and other assets as trading collateral