Mechanism

How it works

Three actions, all open to anyone: mint, hold, redeem.

Mint

You mint the token by depositing collateral. The vault uses that collateral to open the corresponding perp position on Phoenix; you never touch the order book yourself. In return you receive SPL shares that represent your claim on the vault's position.

Hold

While you hold the token, it tracks the vault's exposure. It's an ordinary SPL token, so you can transfer it, route it through a DEX, or LP it like any other asset. The vault keeps its strategy metric inside a target band as flow moves through it (see Keeping the strategy on target).

Redeem

You redeem the token to close. The vault unwinds the matching slice of the Phoenix position and returns collateral. Redemption is permissionless: there is no whitelist and no privileged keeper standing between you and your collateral.

Permissionless & non-custodial

A vault's collateral, its shares mint, and its trader accounts are all controlled by a program-derived address, the vault PDA. There is no admin key holding custody on the side, and no freeze or seize path over the shares you hold. The program logic is the authority, and it's the same logic for everyone.

All three core actions are open to anyone:

• Anyone can mint: deposit collateral and open shares.
• Anyone can redeem: burn shares and pull collateral back out.
• Anyone can rebalance: call the instruction that pulls the strategy back into its band. No privileged keeper has to act for the product to work.

Keeping the strategy on target

Each vault has a deterministic target rule, set by its strategy (see Market views). A trend vault targets leverage against mark-to-market equity. A range vault targets notional against backing collateral. In both cases the rebalance engine pulls the strategy metric back into its band when flow and price push it out, and a hard mark-to-market leverage cap sits on top of every strategy as the safety rail.

That cap matters because what liquidates a leveraged position is leverage drift: price moves against you, effective leverage climbs on its own, and the position marches toward its liquidation price untouched. A position kept in band is structurally less likely to reach liquidation than one left to drift.

That maintenance is largely paid by active flow. Mint and redeem trigger useful resizing of the position; the trader entering or exiting pays the protocol fee and the execution cost, and that flow can push the vault back toward its target, rather than a scheduled rebalance that taxes passive holders.