🗣️Breaking down Bubble Vaults
Speculate on pegged assets, multifold your earnings
Bubble Vaults
There are two types of Bubble Vaults
Hedge vaults
Risk vaults
Hedge Vaults
Hedge vaults operate on a hedging strategy, allowing users to deposit ETH to protect themselves against assets with a higher risk profile. When a user enters a position in the Hedge vault, an ERC-1155 token is created to represent the user's stake in the vault.
Risk Vaults
In the Risk vault, users have the option to sell their insurance coverage by depositing ETH. These deposited ETH are converted into a semi-fungible token, which can be traded within the Bubble-vault.
User Flows
Deposit Period
Users can deposit into Hedge/Risk vaults during the deposit period of the epoch. After the deposit, funds are locked for the duration of the epoch. The deposit period spans over the first 2 days of the Weekly epochs, and the first 7 days of the Monthly epochs. Note that depeg protection is only initiated after the deposit period ends. If a depeg event happens during the deposit period the vault will not strike.
Price Oracle
Chainlink oracles are used to monitor pegged asset prices for each vault. The following are the feeds that will be used:
When the Chainlink oracle indicates that the strike price for a given vault has been hit, the epoch will end and vault will be closed. This will initiate a transfer of Bubble vault deposits to the Hedge vaults.
Protocol Fee
The protocol collects a 5% fee in the following scenarios:
5% of Hedge Vault deposits
5% of Risk Vault deposits upon a depeg event
no fee is charged if peg is maintained
Note: Fee will be collected in $Bubble tokens so make sure you have enough bubble tokens
Example
Consider the following example using $USDT:
A user or DAO that primarily holds stablecoins in their risk-off portfolio can allocate a portion of their ETH holdings to purchase protection against their USDT exposure. Users are required to pay regular premiums, either monthly or weekly, to sustain their Hedge funds.
Conclusion
Bubble vaults provide opportunities for hedging and speculating on pegged assets like USDT, USDC, and DAI. Participants in these vaults can earn rewards of up to 2x based on the outcomes of their positions. Bubble vaults undergo internal audits and their open-source code is accessible for anyone to review, ensuring the absence of vulnerabilities. Additionally, they utilize Chainlink price oracles to trigger price adjustments in case of depegging. The protocol is designed to be safe, secure, and sustainable, making it a reliable choice for users looking to explore these opportunities. So, why wait? Give it a try and test your luck!
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