LP Vault Research

Funding amount

$50,000 USDC (with $250,000 USDC capital contribution)

Start date

May 2024


3 months


This grant will fund the deployment of capital for testing and analysis of the new LP Vaults functionality launching on dYdX. LP Vaults will allow users to deposit capital for liquidity provisioning on long-tail markets using delta-neutral market making strategies. These vaults may allow users to profit in the long run, and will hopefully contribute towards significantly more liquidity on long-tail markets of dYdX.

More information can be found on LP Vaults here:

Through this grant, the DEP will test these vaults prior to public release, allowing a talented research team to deploy capital for research purposes and publish findings on the performance and overall viability as a full featured product. In doing so, the DEP can protect the community from unnecessary exposure to a potentially risky product. Through these research findings, the community will be better equipped to assess risk exposure and tolerance for LP Vaults, and the engineering team will have additional insight on how to potentially improve or upgrade the vaults.

The DEP will distribute an initial $100,000 USDC for deployment on a series of LP Vaults. Following one month of review, we may decide to deploy an additional $150,000 USDC based on the results and early findings. The research team will be actively monitoring and reporting on their findings, which will eventually be prepared as a lengthy forum post for the community to review.

It is expected that the DEP will reclaim most if not all of the $250,000 in capital deployed through this initiative. However, there is some risk that capital is lost. We believe that the DEP is well-suited to act as an initial barrier, preventing any unnecessary user losses should the product not be tested properly before launch.


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