Providing Liquidity
The Atlas Vault is a unified liquidity pool that serves as the counterparty to all leveraged trades. By depositing stablecoins, you become a Liquidity Provider (LP) and earn fees from every open position.
How It Works
- Deposit stablecoins into the Vault
- Receive LP tokens proportional to your share of the pool
- Earn borrow fees from traders who hold open positions
- Withdraw anytime by burning LP tokens to reclaim your share
Vault Mechanics
The Vault tracks the following on-chain:
| Metric | Description |
|---|---|
| Total liquidity | Total stablecoins in the pool (including earned fees) |
| Total LP tokens | Total LP tokens in circulation |
| Reserved liquidity | Liquidity locked to back open positions |
| Long open interest | Total open interest on long positions |
| Short open interest | Total open interest on short positions |
LP Revenue
LPs earn from two sources:
Borrow Fees
When traders close positions, the borrow fee is added to the pool. Since total LP tokens stay the same, each LP token becomes worth more.
Trader Losses
When traders close at a loss, the lost collateral flows to the Vault. When traders profit, the Vault pays out. Over time, if more traders lose than win (which is typical in leveraged markets), the Vault grows.
LP Token Price
lp_token_price = total_liquidity / total_lp_tokens
As borrow fees accumulate and traders lose positions, total liquidity grows while total LP tokens only change with deposits/withdrawals. This means LP token price tends to increase over time.
Quick Links
- Depositing — Step-by-step deposit guide
- Withdrawing — How to withdraw your liquidity
- LP Token Price — Understand how LP token value is calculated