Operating the Vault

This page explains the technical concepts required to successfully operate an Aera vault as an owner.

Deploying a Withdrawal Validator

Every vault requires a withdrawal validator which defines permissible withdrawals. In initial stages, we recommend using the Permissive Validator contract which allows any withdrawal at any time. In the future, withdrawals may be restricted to coincide with treasury shortfalls.

See Withdrawal Validator.

Creating the vault

In order to create a vault, we must first decide the following on-chain details:

  • Pair of assets to be used, currently ETH and USDC is recommended (in future versions, more than 2 assets will be supported)

  • Name and symbol for the vault token (note that vault tokens cannot be used as fungible liquidity positions)

  • Description of the vault

  • A notice period for finalization

  • Initial weights (the vault strategist should be consulted for an appropriate set of initial Balancer weights)

  • Management fee (set to 0 for V1 vaults)

  • A withdrawal validator contract (see above)

We will also advise on:

  • The appropriate Balancer factory contract to use

  • The appropriate Balancer merkle orchard address

The following off-chain details should be agreed

Making an initial deposit

In the user interface, initial deposits are not distinguished in any way from regular deposits, however, initial deposits work differently in the smart contracts, requiring a positive amount of each asset in the Balancer pool to be provided in conformance with Balancer weight restrictions.

Making a deposit

When making a regular deposit, any amount of each of Vault Assets can be provided, however, deposits proportional to existing holdings work better. See Balancer Weights for a longer description but in short, deposits "out of proportion" affect reserve ratios and in turn spot prices, which need to be corrected.

Our recommendation when making a deposit is the following:

  • First pause trading

  • Then make a deposit, aiming to match the proportions of assets in the vault, where possible

  • Then wait until market conditions and inter-asset prices are stable and re-enable trading while aiming to match pool spot price as close as possible to market spot price (this can be done by controlling the weights)

Making a partial withdrawal

Similar logic to deposits applies. While the risk of front running is smaller, we still recommend disabling vault trading.

Making a full withdrawal

In some cases a full withdrawal of all vault assets may be required. In this situation, the vault needs to be finalized before the assets can be withdrawn. The reason is that Balancer does not support a full withdrawal of pool assets and this requires Balancer pool termination. Note that the Aera vault cannot be restarted after finalization and a new vault will need to be deployed.

Making an emergency pause

If the vault is not behaving as expected, at any point the owner or managed can disable trading. Note that the Guardian has no power to enable trading (because enabling trading could lead to arbitrage and requires price opinion).

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