HODL Vaults utilize single-sided concentrated liquidity pools created with a project’s native token so their community can keep their tokens, build liquidity, and earn trading fees.
What are HODL Vaults?
HODL Vaults are a Uniswap v3 liquidity management protocol that allow projects to create single-sided liquidity pools with their native tokens. Projects and DeFi users can deposit a crypto asset and earn more of their deposited asset as the pool generates trading fees and the price of $ICHI increases.
DeFi users benefit by being able to provide liquidity of their favorite tokens while earning high yields thanks to Uniswap v3’s concentrated liquidity. Pool positions are automatically managed by ICHI so users do not have to worry about extra gas fees or spending time actively managing their positions on Uniswap.
How do HODL Vaults Work?
To participate, users simply deposit their desired token and begin earning trading fees in exchange. Users will earn trading fees in both the deposited token and $ICHI, depending on how the pool rebalances in relation to the price of both tokens. When withdrawing, users will receive a combination of the project’s token and $ICHI.
HODL Vaults Tutorials
COMING SOON - We tip community members who create ICHI app walkthroughs and tutorials. If you are interested in becoming a contributor, reach out on the ICHI Discord.
What is a “HODL Vault”?
A HODL Vault is a Uniswap v3 liquidity management protocol focused on enabling investors/protocols to earn more on their single-sided deposit. HODL Vaults allow a depositors to allocate any asset into a Uniswap pool and have that position managed, allowing LPs to enjoy the lucrative experience of concentrated liquidity.
Why would I want one?
For general investors/depositors it provides a way to earn more of their deposited token at a considerably high rate of return (due to the nature of concentrated liquidity).
For protocols it enables the community to aggregate more of their deposited token.
What does the IRR metric on the HODL Vault page represent?
IRR stands for Internal Rate of Return which is defined on Investopedia as the profitability of potential investments. In the ICHI Vault system, the IRR provides a representation of the performance of the vault from inception (meaning an account of its past performance). Due to the fact that it takes into account the past performance of the vault, it is not a perfect representation of future earnings but stands to illustrate what is likely/has been the case until the current date. Additionally, with ICHI's vote for IRR enhancements, the ICHI Foundation will guarantee IRR minimums over the first 6 months of a vault's lifespan.
How do vaults profit/create a positive Internal Rate of Return (IRR)?
This is dependent on many different factors. The IRR is a mixture of earned fees from Uniswap v3 (based on volume of trades in that pool), rebalances, price of the protected asset, and amount of liquidity deposited to the vault. The ICHI UI displays IRR for projects that hit the minimal threshold for Minimum Vault Strength as seen on the Vault Metrics page.
How many types of tokens are deposited into a vault?
The HODL vault takes single-sided deposits which we call the deposit token. The vault is named after the deposit token.
How is initial liquidity supplied to the pool?
The Uniswap v3 pool that is created for the angel vault to deposit to is made up of the deposit token and the paired token. Initial liquidity should be deposited at the creation of the pool and spread across the entire range.
How often do rebalances happen? Are they automated?
Rebalances happen on an as-needed basis. They are monitored by automated software but manually pinged. This will be a fully automated process in the coming months and more information about rebalance strategies will be described in these docs soon.
Who rebalances the vault?
At the moment ICHI governance has been rebalancing vaults for partner projects due to the complexity. In the future, this will be automated and up to the Partner project to ping the contract when wanting a rebalance to occur.
What are the risks of using an HODL Vault?
HODL Vaults are highly risky as they allow for single sided liquidity deposits, and use those to deposit to a liquidity pool. This means deposits are subject to all risks of providing liquidity on an Automated Market Maker (AMM) including but not limited to Impermanent Loss, loss of all funds due to a hack of the contract, negative IRRs, etc. Please do your own research before depositing.