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
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.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
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.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.Relationship to User Vaults
The DLP Vault uses the same vault infrastructure as user-created vaults, but with special parameters:| DLP Vault | User Vaults | |
|---|---|---|
| Manager | Protocol (automated) | Any user |
| Strategy | Automated market making | Manager’s discretion |
| Contribution lockup | 72 hours | 0–7 days (manager-configured) |
| Contributions | Coming post-mainnet | Available now |
| Fee structure | 0% | Manager-defined (0–10%, interval-based) |
Timeline
| Phase | Status |
|---|---|
| Internal testing | Complete |
| Mainnet launch | DLP provides initial liquidity |
| Public contributions | Coming post-mainnet |
Public contributions to the DLP Vault will open after mainnet launch. Check back for updates on timing and terms.
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