The 100xDeep Vault essentially acts as a credit line that allows depositors to generate yield from strategies ran by the market maker and incentives. It allows users to deposit to a smart contract vault. This vault then deposits to an exchange account owned by the smart contract (for example, 100x, vertex, hyperliquid etc.). An approved signer, in this case a market maker can then submit trade orders using the funds on the exchange account and generate revenue, in exchange the market maker and vault will receive extra incentives as described in Section 4. The market maker does not have custody of funds and cannot withdraw at any time.
For v1 of this product the primary mandate is deepening liquidity on the 100x exchange across all books, the market maker can achieve this goal in anyway they see fit.
RFC: Currently the vault is coded to allow for 100x and Vertex, however if the market maker could use another onchain venue as a hedging counterparty this would greatly improve the quality of the product (such as dydx, hyperliquid). Binance and other CEXs could be used in the future but this has compliance hurdles which could take some time to overcome.
Section 1 outlines the technical architecture, Section 2 outlines the responsibilities of the market maker and vault backend, Section 3 outlines the reporting of the vault, Section 4 outlines the incentivisation ideas.
User - any user can deposit funds into the smart contract (if users must meet eligibility requirements this can be explored too)
Market maker - market maker is responsible for operating the trading strategy of the account, is an approved signer of the account, can trade but cant withdraw.
Vault smart contract - the on-chain smart contract responsible for custodying funds, processing deposits and withdrawals and tracking user allocations. Audited by yAudit.
Vault backend - the off-chain system responsible for calculating price per share of the exchange account and for notifying and monitoring the market maker and account respectively. Is an approved signer of the account, can trade but cant withdraw.
100x exchange account (or any exchange account) - the margin account on the 100x exchange. Audited by dedaub and sherlock.
TRADING - via 100x API or any exchange API the market maker and the vault system has integrated. Market Maker is an approved signer of the account and can create orders, but cannot withdraw. Responsibilities explained in Section 2.1 - TRADING.
MONITORING - Explained in Section 2.2 - MONITORING
DEPOSITS -
(1) - User deposits assets to the smart contract
(2) - Smart contract signals the backend that a deposit request was made and the backend computes the price per share for the deposit, allocating the user their shares. The price per share is based on the NAV (net asset value) of the account at the time the deposit request is processed.
(3) - The market maker can allocate funds to any integrated exchange account owned by the smart contract.
WITHDRAW -
(1) - User submits a withdrawal request to the smart contract
(2) - Smart contract signals the vault backend of the request.
(3) - The vault backend signals the market maker of the withdrawal along with an estimate of the amount to withdraw, the market maker must free up funds to ensure the withdrawal can be taken out of the account safely within 4 hours.
(4) - The vault backend will see if the 100x exchange account has funds to safely accept the withdrawal and will submit a withdrawal for the 100x exchange account.
(5) - The exchange account will return the funds to the smart contract
(6) - The price per share is determined and the appropriate funds are sent to the user.