The Vault contract is the cornerstone of the Satoshi Perps protocol, managing deposits, withdrawals, and trading functions. It’s designed to handle complex operations while maintaining high security standards. Key features and operations:

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Deposits

Users can deposit Bitcoin-based tokens (e.g., WBTC, coreBTC) into the Vault to mint SLP-BTC tokens. For example, if the price of SLP-BTC is 1.50 BTC, a user can mint 1 SLP-BTC by depositing 1.50 WBTC tokens. This process increases the liquidity in the protocol and allows users to start earning yields on their Bitcoin holdings.

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Withdrawals

SLP tokens can be burned to withdraw the underlying assets. Following the previous example, if the price of SLP-BTC remains at 1.50 BTC, a user can burn 1 SLP-BTC to redeem 1.50 WBTC tokens. This ensures that users can exit their positions and reclaim their assets when needed.

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Trading

The Vault supports both long and short positions using Bitcoin-based assets as collateral. Here’s how it works:
  • Longing: A user can open a long position by depositing Bitcoin-based tokens. For example, a user might deposit 1 WBTC (worth 50,000)intotheVaultandopenapositionof5BTC(worth50,000) into the Vault and open a position of 5 BTC (worth 250,000). This would be a 5x leveraged long position. If the price of BTC increases by 10%, the user would make a profit of 5 BTC * 10% = 0.5 BTC (or $25,000 at the original price).
  • Shorting: A user can open a short position using Bitcoin-based assets as collateral. A user might deposit 1 WBTC and open a short position of 5 BTC. This unique feature allows traders to maintain their Bitcoin exposure even when betting on price decreases.
  • Liquidations: To maintain system solvency, positions can be liquidated by keepers if losses reduce the collateral to the point where position size / remaining collateral exceeds the maximum allowed leverage. This process is automated to ensure the stability of the protocol.