After creating an Alpha Vault, users will have everything they need to manage liquidity. Here are some of the things they can do with the vault:
Compared to Uniswap V2, Alpha Vaults achieved better liquidity, better LP performance, earned more fees, easier to use, and is more composable. Migrating liquidity from Uniswap V2 to Uniswap V3 is therefore a key use case.
Instead of depositing into Uniswap V3 and choose a range, LPs can use a much simpler front-end.
LPs do not need to choose a range, or to hedge against Capital Loss, because the Alpha Vault will do it on their behalf. They just need to deposit into the vault and withdraw at any time.
A vault can be created for any pool, and its parameters can be changed at any time to optimize yields.
Alpha Vaults' front-end will provide summaries of what the vault will do, and fully transparent performance charts will be available for every vault.
For example:
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.
Alpha Vaults will provide fully transparent performance charts to show the liquidity improvement.
For example:
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.
For example:
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.
Vault managers can set their own fees to manage the liquidity within a vault.
Decentralization is a key priority within DeFi, and it's easier to fully decentralize an Alpha Vault because:
Its code is open source, and all its activities and strategies are on-chain.
The Vault's Parameters are adjustable on-chain, which means liquidity can be managed by a DAO.
The vault manager can be delegated on-chain (eg to a DAO multi-sig).
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.
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