🗝️MegaVault

MegaVault is a user-facing feature that enables dYdX users to deposit USDC, provide liquidity to various markets, and earn yield in return. By aggregating liquidity from depositors, MegaVault ensures that every market maintains the necessary liquidity for smooth and efficient trading.

Vault Mechanics

At a technical level, MegaVault will operate multiple “sub-vaults.” A sub-vault uses deposited USDC to run an automated market-making strategy for a given market. Deposited USDC is allocated to these sub-vaults, and the yield they generate is aggregated and distributed to MegaVault depositors.

Deposit and Withdrawals

Users can deposit USDC into MegaVault at any time and start earning yield immediately. At a high level, depositors can think of deposits as owning a percentage of the vault’s net equity (i.e., the vault’s USDC and position values).

Except in the case of Instant Market Listings, users will be able to withdraw from MegaVault at any time after depositing, though they may experience slippage based on MegaVault’s status, positions and market conditions.

Operator

For MegaVault to work effectively, it requires a dedicated operator to configure and optimize settings across all sub-vaults continuously. This includes spread parameters, skew factors, and liquidity allocation weights that determine how capital is deployed across markets. The operator must monitor market and vault activity and maintain these settings in real-time to ensure optimal market efficiency while protecting vault depositor returns.

On November 21, 2024, dYdX community elected Greave as MegaVault's operator, granting it the ability to update the parameters mentioned above.

How to Deposit into MegaVault

1. Visit dYdX

Navigate to dydx.trade/vault to access the MegaVault page.

2. Connect Your Wallet

To interact with MegaVault, connect a compatible wallet such as MetaMask, Coinbase Wallet, OKX Wallet, Keplr, or many others.

3. Select Deposit Amount

Enter the amount of USDC you wish to deposit into MegaVault. Choose an amount that aligns with your investment strategy and risk tolerance.

4. Approve and Confirm the Transaction

Approve the transaction through your wallet by signing and confirming it. Ensure you have enough funds to cover the gas fees associated with the deposit.

5. Deposit USDC into MegaVault

Once approved, your USDC will be deposited into MegaVault and start earning yield immediately.

6. Generate Passive Income

With your USDC deposited, MegaVault begins automated market-making activities. You’ll earn a share of the profits from MegaVault’s operations and a portion of protocol revenue. Your earnings are added to your deposit balance.

8. Withdraw Anytime

MegaVault has no lock-up periods. Deposits and withdrawals are instant. Visit the MegaVault page to withdraw your funds whenever you like.

FAQ

Where does MegaVault yield come from?

Currently, MegaVault yield comes from profit & loss on vault positions, funding rate payments, and 50% trading fee revenue share (as approved by the dYdX community on November 15, 2024). This trading fee revenue share can be adjusted by dYdX community anytime via dYdX Chain governance.

Can MegaVault depositors lose money?

Yes. MegaVault does not guarantee positive yield, as it depends on many factors including market conditions, vault positions, etc. For example, if the vault has a long position and the price drops, then the vault’s net equity decreases. In this example, the depositor’s percent ownership of the vault remains the same, but the value of the ownership decreases.

How much yield can depositors expect?

Yield is not guaranteed. The MegaVault's performance depends on many factors that are outside of the protocol’s control.

Why would withdrawals incur slippage?

When withdrawing from MegaVault, “slippage” can occur due to increased leverage from collateral outflows or the need to close positions to cover withdrawal outflows.

Will users be able to directly interact with sub-vaults?

Currently, users cannot directly deposit into or withdraw from specific sub-vaults.