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Understanding Metavaults

The Metavaults, and how they hedge downside or amplify upside for LPs.
Example Metavaults UI

What are Metavaults?

Metavaults allow users to provide liquidity while also automatically hedging or slightly levering price action on underlying tokens, subject to available liquidity. Jones Metavaults take LP positions to the next level.

How do they work?

Users can provide LP tokens (currently rDPX:WETH or DPX:WETH) and deposit them into a Metavault.
The Metavault strategy stakes the LP token in Dopex farms, generating yield in DPX and rDPX tokens.
  • The strategy can use a portion of this yield to buy options:
    • In the Bull Metavault, this portion of LP yield is used to purchase calls.
    • In the Bear Metavault, this portion of LP yield is used to purchase puts.
  • The remainder of this yield is auto-compounded into the LP farm.
    • Accretions from options’ settlement are compounded into the LP position.
Users can deposit anytime during ongoing 1-week epochs.
Flip: This feature allows users to switch from Bull to Bear or vice versa in the middle of an epoch, with the change taking effect automatically next epoch. Users can use Flip to adjust the bias of their Metavault position.
Users can signal to exit the Metavaults at any time. Tokens will be automatically unlocked and claimable at the end of the current epoch.

Benefits

  • Bull Metavault: Stake LP token in Dopex farms, if liquidity allows, buy calls with a portion of the weekly yield. If the LP tokens appreciate in price, the calls might be above the strike threshold, generating more yield overall and amplifying the upside.
  • Bear Metavault: Stake LP token in Dopex farms, if liquidity allows, buy puts with a portion of the weekly yield. If the LP tokens depreciate in price, the puts might be below the strike threshold, partially protecting the downside of the position.
  • Flip: Swap between Bull and Bear Metavaults according to users’ direction, with the change taking place next epoch. Allows the user to adapt their position to market conditions.
  • Auto-compounding: enables LP auto-compounding that is not currently available natively on the Dopex platform.

Options Exposure

  • A portion of the weekly yield generated by staking LP tokens may be used to purchase options.
  • This ensures the Metavaults are direction-managed with options exposure in accordance with the user’s direction.

Use Cases

  • Users can both farm LP yields for ecosystem tokens like $DPX and $rDPX, while having smart exposure or protection as they direct.
  • During an acute uptrend in the price of LP tokens, a Bull Metavault should outperform a naked LP position. During an acute downtrend in the price of LP tokens, a Bear Metavault should outperform a naked LP position.
  • Enhance LP positions with accretion from options’ settlement