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LP Vaults

LP Vaults hold token liquidity for swaps on Naga.

What are Vaults?​

Vaults are smart contracts that store tokens provided by liquidity providers. When traders swap tokens, the vault supplies the output token and receives the input token.

Unlike AMMs or lending protocols, vaults don't rebalance assets or follow bonding curves. They simply hold inventory managed by liquidity providers.

How Vaults Work​

For Traders​

When you swap tokens:

  1. You send Token A to the vault
  2. The vault sends you Token B
  3. At least 0.35% fee is charged on the trade(depending on the fee tier):
    • 0.2% goes to the liquidity provider (vault owner)
    • 0.15% goes to the protocol
  4. The fee tier is determined by the token and amount swapped.

For Liquidity Providers​

As a vault owner, you:

  1. Deploy a vault contract
  2. Deposit tokens into your vault
  3. Earn at least 0.2% on every swap that uses your vault's liquidity
  4. Manage your vault's token inventory
  5. Withdraw tokens anytime

Fees​

Trading Fees​

Total fee: 0.35% per swap

  • Liquidity Provider Fee: 0.2% Goes directly to the vault owner who provided the liquidity

  • Platform Fee: 0.15% Goes to the protocol treasury

Example​

On a 10,000 USDT → MYRC swap:

  • Total fee: 35 USDT
  • LP (vault owner) earns: 20 USDT
  • Protocol receives: 15 USDT

Risks​

Inventory Risk​

You hold actual tokens in the vault. If you deposit USDT and MYRC, you're exposed to MYRC price movements.

When traders swap USDT for your MYRC:

  • Your vault's MYRC decreases
  • Your vault's USDT increases
  • You now have more USDT exposure, less MYRC exposure

Smart Contract Risk​

Vault contracts are minimal and simple, reducing attack surface. However, all smart contracts carry some risk.

Oracle Risk​

Swaps rely on Chainlink & Blocksense price feeds. Oracle failures or manipulation could affect trade pricing. Naga deploys an additional off-chain protection to ensure the accuracy of the prices and safety of your vaults.

Inventory Management​

Unlike AMMs, vaults don't automatically rebalance. If your vault runs low on a token, you won't earn fees on swaps requiring that token until you refill it.

Strategies​

Single Pair Specialist​

Focus on one trading pair (e.g., USDT+MYRC):

  • Maintain balanced inventory of both tokens
  • Monitor which direction trades flow
  • Rebalance manually when needed

Multi-Token Vault​

Hold multiple tokens(e.g., USDC+USDT+MYRC):

  • Capture fees from various pairs
  • More complex inventory management
  • Higher potential fees, higher complexity

Passive Provider​

Deposit tokens and let them sit:

  • Minimal management
  • Inventory slowly shifts based on trade flows
  • Rebalance occasionally

Getting Started​

Ready to provide liquidity?

  1. Create a vault on Naga Vaults
  2. Deposit tokens into your vault
  3. Your vault is now available for traders
  4. Earn at least 0.2% on every swap

Common Questions​

Do I receive vault shares?​

No. You own the vault contract directly and control all tokens in it.

What if my vault runs out of a token?​

Traders can't swap through your vault for that pair until you refill it. Deposit more tokens or swap your excess tokens.

Can I set my own fees?​

No. Fees are set globally based on fee tiers. If you have suggestions on the fee tiers, please contact us on Telegram.

How often should I rebalance?​

Depends on trade volume and your strategy. Some rebalance daily, others weekly or only when severely imbalanced.

Security​

Vault contracts are minimal by design - less code means less attack surface. The router handles all swap logic and fee distribution.

However, all DeFi carries risk. Only deposit funds you can afford to lose.

See the full Risks documentation for complete risk disclosure.

Forex vaults vs Earn Vaults​

Naga has two separate systems:

  • Forex vaults - provide liquidity for swaps
  • Earn vaults - provide liquidity for borrowing

These are completely different products. Visit the Earn & Borrow section to learn about earning and borrowing.