What is Liquid Vault and Why is it groundbreaking?
During a standup with Degen Labs senior dev Justin Goro last November 2020, Justin introduced an idea for a smart contract that holds a project’s tokens but to which anyone can send ETH and receive back LP tokens.
He called it the Liquid Vault and a few days later he pushed an initial version in solidity to the dev team.
The idea was primarily interesting because the LP tokens are essentially offered at a 50% discount. It was additionally interesting because of the possibilities this opened up. This smart contract — “Liquid Vault”- could also:
- Lock the LP tokens created by pooling on Uniswap project tokens with a buyer’s ETH for a period before the buyer could claim them;
- Charge an ETH fee thus reducing the 50% discount. This ETH could then be used for other purposes;
- Permanently lock some LP tokens while still giving the buyer LP at a discount.
Why is Liquid Vault groundbreaking?
Degen.VC will leverage Liquid Vaults in at least five new initiatives during Q1 in the following innovative ways:
- In HARDCORE, ETH from Liquid Vault will fund treasury, aka Lambos;
- In DGVC-V2, three interconnected Liquid Vaults will offer Degens different LP discounts for one month, three month and twelve month lock periods;
- In Rock3T, all three economic levers described above are leveraged and algorithms constrain relationships between different parameters to strengthen the R3T token.
- For AUTH, we will expand Liquid Vault to also function like a price regulator swapping tokens for ETH on Uniswap when the price rises above a target token sale price.
- In March, one of our Gitcoin Hackathon prizes will invite participants to innovate with Liquid Vault and come up with new uses and applications.
Liquid Vault is 250 lines of code packed with enough power to drive tokenomic systems in multiple new ways. It is Degen Labs second major innovation and contribution to the DeFi ecosystem.