MegaVault is a user-facing feature which enables users of dYdX* to add USDC funds to support markets on dYdX. The funds you add will be used to run automated trading strategies across dYdX markets. These include high risk, illiquid and volatile markets, and accordingly there is material risk of loss. MegaVault is designed to support the protocol and not maximize trading returns.

*dYdX means the dYdX open source software blockchain protocol

Returns may be generated by positive PnL on sub-vault positions, funding rate payments, trading fee revenue share or other protocol incentives devised by the community. MegaVault is designed to support the protocol and not maximize trading returns.

Yes. MegaVault is designed to support the protocol and not maximize returns. MegaVault’s positions may have negative trading PnL, and those losses could outweigh returns from protocol fee sharing or other sources of return. MegaVault takes automated positions in the associated protocol, and therefore is not a source of guaranteed positive yield, as yield depends on many factors including market conditions, vault positions, etc. For example, if the vault strategy has a long position in a particular market and that market’s price drops, then the value of the vault position will decrease. In this example, the user’s percent ownership of the vault remains the same (assuming no new vault entrants), but the value of the ownership decreases. Thereafter, new entrants to the vault may buy vault ownership at lower vault values and dilute existing vault owners’ claim on future fees, or future vault PnL.

The APR is an estimated representation of annualized returns based on past performance which fluctuates significantly. Increases in MegaVault TVL will likely lead to reductions in APR as more users share the protocol revenue received by the MegaVault. For example, if protocol revenue is $10 and MegaVault has a TVL of $50, MegaVault APR will be 20% (10/50*100%). However, if the TVL increased to $100 and the $10 revenue was unchanged, MegaVault APR will reduce to 10% (20/100*100%).

The APR reflects past 30 day performance of the MegaVault, and is not an indicator of future performance. Performance is defined as PnL, protocol fees, and any other incentives provided by the community. The performance of MegaVault depends on many factors that are outside of the protocol’s control. MegaVault has no track record and any historical performance is not indicative of future performance, or actual results.

Megavault returns are also only paid out once funds are removed and are subject to slippage (discussed below), so actual returns over the period of time the funds are in MegaVault may vary significantly from estimated APR shown at the time the funds were added.

The APR shown on the UI is calculated by taking MegaVault’s total returns over the past 30 days (or lesser period if 30 day data is not available, such as the first month of MegaVault’s operation) and multiplying it by 365/30 (i.e. ~12) to estimate the yearly return. In the initial month of the MegaVault, for example, the APR will reflect returns during the few days the MegaVault has been operational, extrapolated to the next 12 months.

MegaVault returns can come from various places (e.g. positive PnL on vault positions, funding rate payments, trading fee revenue share, and other protocol incentives). MegaVault is likely to take positions in sub-vaults that are making losses. MegaVault APR may be positive notwithstanding trading losses as the losses may have been offset by other revenue sources.

The APR is calculated as follows:

Where,

30 day PnL is calculated as follows:

current TVL is calculated as follows:

The current value of all positions held by MegaVault is calculated by summing the value of each position held by MegaVault.

Value of each position held by MegaVault is calculated as follows:

PnL of MegaVault is calculated by summing (i) the profit or loss on each position held by MegaVault; (ii) the protocol fee revenue paid to MegaVault; (iii) funding rate payments made to MegaVault; and (iv) other protocol incentives paid to MegaVault.

total PnL is calculated as follows:

There are no restrictions removing funds except for when launching a new market. When a user launches a market, they must add 10,000 USDC to MegaVault, which is then locked for an estimated 30 days.* After the lock up period has passed, the funds can be removed. Other than restrictions related to new markets, funds can be removed subject to slippage that may occur (discussed below). Read more about instant market listings here.

* The funds are locked for 2592000 dYdX protocol blocks.

When closing positions from MegaVault, “slippage” can occur. Slippage is a fee that you pay when you remove your funds and thereby cause the MegaVault to increase leverage. When funds are removed, MegaVault updates traded positions and frees up assets to meet your request. The removal of funds reduces the amount of collateral MegaVault holds for each sub-vault position traded and increases MegaVault leverage. The slippage fee is in proportion to how much funds removal increases the MegaVault leverage. An estimate of the slippage amount is shown on the UI. Slippage rates can be low, and may be very high. MegaVault does not provide the ability to set the slippage level when removing funds. There are no hard limits on the leverage MegaVault assumes.

The greater the impact of funds removal on MegaVault leverage, the greater your slippage fee. For example, assume the following in each of the below scenarios:

MegaVault will use cross-margined funds. Thus, when you add funds to MegaVault position while having any cross-positions open, your cross margin usage will increase.

You. When you add funds to MegaVault, you maintain control over your funds via the private keys associated with your wallet address. The funds you add to MegaVault will automatically participate in MegaVault trading strategies, but only you can remove your funds and access your USDC.

No. If you reside in, are located in, or have a registered office in the United States, Canada, or any other prohibited jurisdiction, you may not add funds to MegaVault. dYdX open source software is not permitted to be deployed or accessed by users in certain prohibited jurisdictions, and detailed information can be found here.

Yes, the number of users who may participate and the amount of funds they add to MegaVault is unlimited and each addition of funds will dilute the proportion of fee revenue and PnL attributed. For example if protocol revenue is $10 and MegaVault has a TVL of $50 from two users Alice ($40) and Bob ($10). Alice will receive 80% of MegaVault future revenues (i.e. $8) and Bob will receive 20% of future revenues (i.e. $2). However, if protocol revenue is unchanged at $10 and instead instead TVL increased to $100 from three users Alice ($40), Bob ($10) and Carl ($50), Alice’s will receive 40% of revenues (i.e. $4), Bob will receive 10% of revenues (i.e. $1) and Carl will receive 50% of revenues (i.e.$5).

In addition to using automated trading strategies, MegaVault depends on an operator to oversee market allocation and make periodic adjustments to automated trading parameters as needed. An operator would typically be appointed by community grants program and community vote. Users should assume that the operator has little or no operating history and the user should not place undue reliance on the community vote. Users should independently research the applicable operator and determine whether the operator is a suitable party to manage MegaVault.

MegaVault keeps track of the proportion of MegaVault held by each user. Below is an example of how MegaVault does this.

Event #1: MegaVault has a total of 0 and Alice adds $90.

Results After #1:

Event #2: Bob adds $10.

Results After #2:

Event #3: MegaVault receives $10 from protocol revenue share

Results After #3:

Event #4: A sub-vault’s equity decreases by $20

Results After #4:

Event #5: Carl adds $10

Results After #5:

Disclaimer and Terms

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