$VLP
VLP is the liquidity provider token for VELA Exchange platform. It’s based on USDC staking, and can be redeemed for USDC at any time. Anybody can stake USDC to mint VLP and earn fees based on generated trading volume on the platform.
In order to Mint VLP you need to:
- 1.Bridge USDC from any ecosystem to Arbitrum.
- 2.Stake USDC (ensure that some ETH is available in your wallet to pay for the network transaction fees) by entering the amount of VLP you’d like to mint.
There were no fees for minting VLP during the Hyper VLP period. Currently for VLP there is a 0.3% fee for minting and redeeming.
Redeeming VLP is just as simple by entering the amount of VLP and selecting the stablecoin you'd like to redeem for (with USDC being the only available option at time of launch).
Cooldown: Every time a new VLP is minted, it will start a 2-day cooldown period for your VLP balance. After this period, VLP balance can be redeemed for USDC at any time until any new VLP is minted.
In addition to the staking function for minting VLP, users also have the ability to whitelist wallets or contracts that can stake on their behalf. In the future this will be used to allow cross-chain staking functionality utilizing platforms like Axelar.
VLP is to provide liquidity for traders, allowing them to take positions with leverage. If traders take a loss then the VLP holders will make profit, if the traders take a profit then VLP holders will make a loss. Although VLP value is market neutral and is not directly affected by the crypto market volatility, holding VLP still bears risks. For taking these risks, VLP stakers can earn up to 60% of the platform fees generated via trading activity.
Smart Contract risk: Vela Exchange smart contracts are fully audited but nonetheless some inherent risks will always exist with any smart contracts.
Counterparty risk: If traders make profit, that profit is paid to the trader out of the VLP pool.
Depegging risk: In the unlikely scenario that USDC depegs, VLP is directly affected.
The open interest available for the perpetual platform is limited by the total USDC available in VLP. Traders cannot open a new position if the total platform open interest meets or exceeds the total TVL in VLP.
A portion of all protocol generated [
] fees including opening/closing positions, minting VLP, and excess funding fees as well as any losses [
] from traders realized P&L and liquidations go towards the VLP vault causing it's price to go up over time. Any profits [
] from traders realized P&L are paid out from the VLP vault causing its price to decrease. Overall, it is expected and highly probable that the price of VLP will gradually increase over time as net inflow exceeds net outflow.
The VLP price is based on the number of USD and VLP in the vault, at any time, where:
The amount of VLP minted [
] or redeemed [
] does not affect the price of VLP however it does affect the rate at which VLP price changes which can be expressed as follows:
For example let's say you mint 1000 VLP at a price of $1.00 by depositing 1000 USDC into the VLP Liquidity Pool. Over time, due to the net flow of USDC into the pool, let's say the price of VLP has gone up to $1.50. If redeeming your 1000 VLP (now worth 1500 USDC), you would have made a 50% return on your initial investment.
Vault Contract Address: 0x5957582F020301a2f732ad17a69aB2D8B2741241
By staking their VLP, users receive a share of 10% of the total perpetual fees in esVELA for each corresponding rewards cycle.
Last modified 2mo ago