Liquidity Providing

Liquidity providers (LPs) can supply USDC to Vest’s unified liquidity pool and earn a share of trading fees generated by zkRisk. The incentive structure is carefully designed to minimize the player-versus-player (PvP) dynamics common in popular GMX-like pool-based markets, promoting a more stable, predictable yield and healthier market overall.

Incentive Structure

• Risk-Aligned Yield: LPs’ primary source of yield comes from trading fees. Crucially, LPs do not profit from aggregate trader losses, eliminating the adversarial relationship between traders and liquidity providers.

• Market Spike Protection: In volatile markets, sudden price swings ("spikes") can quickly wipe out liquidity in traditional pools. On Vest, when traders incur losses, those funds are first placed into a protection buffer that absorbs these sharp market moves. This buffer shields LP capital from sudden directional risks, ensuring that unexpected price swings don’t erase months of earned yield.

• Purely Risk-Based Compensation: To protect against market risk, LPs receive premia and funding determined entirely by zkRisk’s risk assessments. This serves as an additional buffer to being the counterparty to traders.

Liquidity withdrawals require an 8-hour lock-up period, ensuring system stability while offering LPs flexibility. Withdrawal requests are processed after this period, providing a balance between liquidity access and platform security.

Immediate withdraws at the expense of paying a fee will come soon.