Here are some of the things they can do with the vault:
A vault can be created for any pool, and its parameters can be changed at any time to optimize yields.
If the performance chart shows LP Returns of 8.2% over 4 months (without any token incentives), an LP who deposited 1 ETH and 2000 USDC would have earned 0.082 ETH and $164 USDC 4 months later.
Liquidity Managers can change the vault's Strategy Parameters at any time to increase liquidity.
If the performance chart shows a vault achieved 163x better Liquidity than Uniswap V2 and generated 6.5% LP Returns over 4 months, $100 deposited into an Alpha Vault would have achieved a better outcome than $16,300 deposited into Uniswap V2 or a Full-Range position.
Projects need less funds to create liquidity markets for their tokens.
If a vault achieved 133x better Liquidity than Uniswap V2, and generated 3.5% LP Returns over 4 months, then:
For every $100 in CRV deposited into the Uniswap V2 or a Full Range Position, only $0.75 of CRV is needed in an Alpha Vault to achieve a better outcome. Projects can save $99.25.
Decentralization is a key priority within DeFi, and it's easier to fully decentralize an Alpha Vault because:
Alpha Vault's LP Shares are ERC-20 and everything is on-chain. This means the vaults can be used as basic building blocks in other applications. For example:
Lending protocols can accept Alpha Vault LP Shares as collateral, and use the vault's open-source code to track the collateral's performance in their liquidation engine.
Yield aggregators can use Alpha Vaults to build more sophisticated income generating products.
Investors or traders can actively change the Vault Parameters to create complex strategies.
Instead of using a staking contract to directly incentivise a V3 pool, projects can deploy a standardised Uniswap V2 staking contract, and invite their LPs to stake their Alpha Vault shares (which are ERC-20) into the contract.
The above is a familiar process for LPs and projects, and a safer way to distribute rewards because everyone uses the same LP Strategy to receive rewards.