> For the complete documentation index, see [llms.txt](https://docs.afx.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.afx.xyz/vaults/lp-vault.md).

# LP Vault

The LP Vault — also known as **AFX Provider (ALP)** — is the protocol-level liquidity vault. It serves as the backbone of the AFX exchange, providing liquidity for trading, handling liquidation takeovers, and absorbing market-making risk.

## Overview

* **Operator Fee:** 0% (no management fee)
* **Profit Share:** 0% (all returns go to depositors)
* **Deposit Currency:** USDC
* **Lock Period:** Deposits are locked for **4 days** before becoming withdrawable.

## How It Works

The LP Vault consists of multiple sub-vaults, each serving a specific function:

* **Market Making Sub-Vaults:** Execute market-making strategies to provide liquidity on the order book and earn the bid-ask spread.
* **Liquidation Takeover Sub-Vaults:** Absorb positions from liquidated users and close them at a discount, earning the liquidation fee and any favorable price difference.

A strategy smart contract manages the trading signals and returns for each sub-vault. The Vault manager (protocol team) configures strategy allocation and risk parameters but cannot directly withdraw user funds.

## Revenue Sources

1. **Trading fees:** After deducting the **Referral commission** from the AFX-wide fee revenue, 50% of the remaining amount will be transferred to the LP Vault as earnings.
2. **Liquidation takeover margin:** Remaining maintenance margin from liquidated positions.
3. **Liquidation fees:** 0.5% of the maintenance margin collected during position takeover.
4. **Strategy earnings:** The LP Vault will be managed by professional traders who implement trading strategies. Any profits generated will also remain within the LP Vault.

## NAV Calculation

Since the LP Vault has multiple sub-vaults with different performance, the main Vault NAV is a **weighted average** of each sub-vault's NAV:

```
Main Vault NAV = Σ (Sub-Vault NAV_i × Weight_i)
```

For example, if Sub-Vault 1 has NAV = 1.1 (weight 40%), Sub-Vault 2 has NAV = 1.2 (weight 30%), Sub-Vault 3 has NAV = 1.4 (weight 20%), and Sub-Vault 4 has NAV = 1.3 (weight 10%), then:

```
Main Vault NAV = 1.1 × 40% + 1.2 × 30% + 1.4 × 20% + 1.3 × 10% = 1.21
```

## Deposits

* Minimum deposit: No minimum beyond what is required by the blockchain transaction.
* No maximum deposit limit.
* Deposits are locked for **4 days** before they can be withdrawn.
* Shares are minted at the current NAV at the time of deposit.

## Withdrawals

All withdrawals are processed from the main Vault. If the main Vault has sufficient available balance, the withdrawal is processed immediately. If not, sub-vaults contribute funds proportionally based on their configured ratios.

Each sub-vault reserves **20% of min(Balance, Available Balance)** as a liquidity buffer. If sub-vault funds are still insufficient after using the buffer, the system may cancel orders or close positions (starting from smallest margin) to free up capital.


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