Vault Lifecycle
Complete journey from proposal to settlement.
Phases
Proposal - Investor creates offer
Acceptance - Trader accepts, vault activates
Active Trading - Strategy execution
Closure - Deal ends or limits breached
Settlement - Profits split, funds distributed
Phase 1: Proposal
Create
Funding > Create Proposal
Configure terms (capital, profit share, duration, risk limits)
Reserve vault address
Transfer USDC to vault
Confirm funding
Status: PENDING
States
Pending
Awaiting trader response
Accepted
Moves to Phase 2
Declined
Trader rejected
Canceled
Investor canceled
Expired
Timeout reached
Phase 2: Acceptance
Trader Review
View proposal on Funding page
Check terms (capital, share, duration, limits)
Click Accept or Decline
Vault Activation
On acceptance (automatic, takes 2-5 minutes):
Funds bridge to Hyperliquid
Risk monitoring begins
Trading is enabled
Initial state:
Status: ACTIVE
Balance: Your capital
Peak: Your capital
Deadline: Now + duration
Phase 3: Active Trading
Trading Operations
Trader:
Place orders on Hyperliquid
Manage positions (long/short)
Monitor PnL and drawdown
Stay within risk limits
Risk Monitoring
Balance is monitored in real-time:
Max drawdown checked continuously
Daily drawdown checked continuously
Peak balance updated on new highs
Auto-pause if limits breached
If limit breached: Vault pauses, new orders rejected, positions can be closed.
Investor Monitoring
Dashboard shows:
Current balance (real-time)
Drawdown % from peak
Daily drawdown % from day start
Open positions
Trade history
Alerts:
Warning: Within 5% of limit
Critical: Within 2% of limit
Paused: Limit breached
Pause Scenarios
Max Drawdown Example:
Initial: $10,000
Peak: $11,000
Max Drawdown: 20%
Pause at: $8,800
Daily Drawdown Example:
Balance at midnight UTC: $10,000
Daily Drawdown: 5%
Pause at: $9,500 (resets each midnight UTC)
When paused:
New orders rejected
Can close positions (reduce-only)
Monitoring continues
Unpause after recovery or close vault
Phase 4: Closure
Triggers
Deal Deadline
Duration expires
Risk Limit
Max/daily drawdown hit
Early Termination
Mutual agreement (if enabled)
Inactivity
No trades for extended period
Process
Trader closes all open positions
Closure is triggered
Final balance locked
Settlement processes
Profit Calculation
Example:
Initial: $10,000
Final: $12,000
Profit: $2,000
Share: 80/20 (trader/investor)
Result:
Trader: $1,600 (80% of profit)
Investor: $10,400 ($10k + 20% of profit)
Scenarios
Profitable:
Capital: $10,000, Final: $15,000, Profit: $5,000
Trader: $4,000, Investor: $11,000
Loss:
Capital: $10,000, Final: $9,000, Loss: $1,000
Trader: $0, Investor: $9,000
Max Drawdown Hit:
Capital: $10,000, Paused at: $8,000
Trader: $0, Investor: $8,000
Recovery After Pause:
Capital: $10,000, Paused at: $8,000, Recovered to: $11,000
Trader: $800, Investor: $10,200
Phase 5: Settlement
Automatic Settlement
Final balance calculated
Profit splits computed
USDC distributed to trader and investor
Vault marked complete
Timing: Processes within minutes of closure.
Post-Settlement
Status: CLOSED
Historical data preserved
Trade history exportable
Timeline Example
Day 0: Proposal ($10k, 30d, 80/20)
Day 1: Accepted, vault activated
Days 1-28: Trading, grows to $13k
Day 29: Positions closed at $13.5k
Day 30: Deal closes, profit $3.5k
Trader: $2,800
Investor: $10,700
Day 31: Settlement completes
Best Practices
Traders
During trading:
Check status before sessions
Monitor drawdown daily
Keep 5-10% buffer below limits
Set stop-losses
Approaching deadline:
Plan exit 2-3 days before
Unwind gradually
Lock in profits
If paused:
Assess recovery vs. closure
Use market orders if closing
Investors
During trading:
Monitor daily (don't micromanage)
Trust trader's strategy
Intervene only for severe issues
Risk management:
Diversify across traders
Start small
Set 20-25% limits
Review weekly
At closure:
Verify final balance
Check settlement calculation
Confirm fund receipt
FAQ
Can I extend duration? No. Close current vault, create new proposal.
What if trader disappears? After inactivity timeout, trigger closure and withdraw current balance.
Can I withdraw mid-deal? No. Funds locked until closure to protect trader's strategy.
What happens to open positions at deadline? Trader must close before deadline. Grace period provided.
Can profit share be renegotiated? No. Terms locked at creation. Close vault, create new proposal.
Next Steps
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