# Vaults ## Why Vaults? bUSD0 is a composable product designed to access DeFi opportunities while preserving its productive nature. With **Usual Vaults**, bUSD0 holders can deposit bUSD0 directly into Vaults and gain exposure to integrated external strategies **in addition to** bUSD0’s ongoing USUAL token rewards. This integration delivers three outcomes: * **Stronger demand for bUSD0** by adding utility beyond holding to maturity or providing liquidity * **Sustainable revenue for the USUAL DAO** via management and performance fees * **Active deployment into high-yield DeFi strategies**, supporting long-term ecosystem growth and stability As described in the protocol’s product taxonomy, Vaults extend the Liquid Bond Token (LBT) composability principle: bUSD0 can be deployed across DeFi while remaining productive. Vaults formalize that composability into a managed, curated experience. *** ## How Usual Vaults work Vaults leverage partnerships, most notably **Lagoon Finance,** to provide “managed composability.” Each Vault is managed by a **curator**, who is responsible for: * Selecting investment strategies, including Real-World Asset (RWA) opportunities with **T+1 settlement** * Ensuring fair valuation of Vault shares using **oracle pricing** * Reducing front-running risk through **epoch-based settlement** ### Deposit flow (epoch-based) When depositing into a Vault, users convert bUSD0 **1:1 into USD0**. Deposits are processed through an epoch mechanism: 1. **Epoch initialization**\ The first epoch begins at contract initialization. 2. **Deposit request**\ Users submit a deposit request (e.g., `300 bUSD0`) and transfer assets into a secure **silo**. 3. **Settlement**\ The curator calls `settleDeposit`, which: * secures the deposited tokens, and * mints Vault shares at a fair valuation based on current **oracle pricing**. 4. **Optional cancellation (pre-settlement)**\ Before settlement, users can cancel the deposit request and recover their tokens from the silo. ### Withdrawal flow (epoch-based) To redeem Vault shares, users follow this process: 1. **Withdrawal request**\ Users submit a redemption request and place their Vault shares into a **silo**. 2. **Epoch transition**\ The curator updates total assets, closing the current epoch and opening the next. 3. **Redemption settlement**\ The curator executes `settleRedeem`, which burns Vault shares and transfers the equivalent **bUSD0 plus accrued interest** back into the Vault (for user claiming). 4. **Claiming funds**\ Users call `redeem` to transfer the redeemed assets to their wallet. This step is optional, but prompt redemption is generally better for financial optimization. *** ## Vault fees Vaults apply a performance fee only to returns above a base yield (the **reference rate**) set by the DAO (e.g., **4% APY/APR**). For example, the stUSR Vault charges a **20% fee** on yields exceeding this reference rate. | Fee type | Description | Typical rate | | --------------- | ------------------------------------------- | ----------------------------- | | Management fee | DAO retains yield up to the reference rate | Reference rate (e.g., 4% APR) | | Performance fee | Charged on returns above the reference rate | 20% | | Entry/exit fee | None for standard deposit/withdrawal | 0% | This structure ensures the DAO captures a baseline return on Vault capital (supporting the protocol’s insurance fund and treasury operations), while users benefit from outperformance above the reference rate. *** ## Available Vaults ### ustUSR++ Vault The inaugural Vault strategy, the **ustUSR++ Vault**, deploys bUSD0-sourced USD0 into **stUSR** (Resolv’s staked USR token), a delta-neutral yield product. Key characteristics: * **Underlying strategy:** stUSR (Resolv’s staked USR token) * **Yield source:** delta-neutral cash-and-carry strategies, similar in concept to USD0a (Alpha USD0) * **Settlement:** T+1 settlement for RWA-related components * **Performance fee:** 20% on yields above the reference rate * **Curator:** managed by a dedicated Lagoon Finance curator ### Superstate Vault ### Syrup Vault ### Sky Vault *** ## Risk considerations Vaults introduce additional risks compared to holding bUSD0 directly: | Risk category | Description | Mitigation | | ----------------------- | ------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | | **Smart contract risk** | Reliance on Lagoon vault infrastructure and underlying protocols introduces smart contract vulnerabilities | Usual Protocol has undergone 20+ audits by leading firms; Lagoon Finance contracts are independently audited | | **Strategy risk** | Strategies (e.g., stUSR) face market risks such as negative perpetual funding rates driven by long/short imbalances | Curator selects proven, audited strategies; diversification across strategy types | | **Counterparty risk** | Exposure to external trading platforms (e.g., exchange hacks) | Use of institutional-grade counterparties; the protocol’s multi-layered counterparty risk framework informs strategy selection | | **Liquidity risk** | Epoch-based settlement can delay withdrawals | Deposits can be canceled before settlement; epoch durations are kept short | | **Curator risk** | Performance depends on curator strategy selection and execution | Curators are vetted; DAO governance can adjust parameters and curator appointments | > **Important:** Vault users should assess these risks against potential returns. Vault strategy yield introduces exposures beyond the conservative collateral profile of USD0’s underlying T-Bill backing, which maintains zero tolerance for credit and FX risk and limits duration to under 0.33 years. ### Holding bUSD0 vs. depositing into a Vault | Feature | Holding bUSD0 | Vault deposit | | ----------------------- | ---------------------------------- | ----------------------------------- | | USUAL daily coupons | ✅ Yes | ✅ Yes | | External strategy yield | ❌ No | ✅ Yes | | Smart contract risk | bUSD0 contract only | bUSD0 + Lagoon + strategy contracts | | Liquidity | Immediate (secondary market) | Epoch-based withdrawal | | DeFi composability | Full (Pendle, Morpho, Curve, etc.) | Limited to the Vault position | | 1:1 maturity redemption | ✅ Guaranteed (June 2028) | ✅ Via bUSD0 redemption at exit | *** ## Key takeaways * **Two yield streams:** bUSD0’s native USUAL rewards plus external strategy returns. * **Epoch-based settlement:** curator-managed epochs support fair valuation and reduce front-running. * **Fee model:** the DAO retains yield up to the reference rate; users earn excess returns minus a \~20% performance fee. * **Risk/reward trade-off:** higher potential yield comes with additional smart contract, strategy, and counterparty risk. * **Pre-settlement cancellation:** users can cancel deposit requests before settlement. * **Powered by Lagoon Finance:** Vaults use Lagoon’s managed vault framework for security and operational efficiency. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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