Skip to main content

MIP-2: Metaliquidity

MIP-2 defines Metaliquidity, the protocol liquidity-provider vault.

In progress

The on-chain vault is landing. The market-making strategy runs off-chain.

Metaliquidity is the protocol and community liquidity-provider vault of MetaFlux. It supplies native liquidity. It is the analogue of the automated liquidity-provision proposal on established on-chain venues. Liquidity providers deposit USDC into the vault. They share in the PnL of a market-making strategy that quotes on the order books. The vault provides resting liquidity for takers, so markets do not depend only on external market makers from day one.

On-chain and off-chain parts​

The design splits the parts on purpose, to keep the consensus surface small:

  • On-chain: the vault only. Pooled LP capital, share accounting, NAV marked to market against the oracle, a withdrawal lock, and a whitelist of recognised provider addresses.
  • Off-chain: the strategy. The market-making logic (quoting, inventory management) runs as a normal MTF-native client. A whitelisted strategy key signs orders for the vault account. It submits them through the normal signed-order path. Consensus contains no strategy logic.

Scope​

A Metaliquidity vault trades the markets its operator quotes. A deployer market is a market that a builder deployed, with an asset id of 1000 or more. The rules below separate a deployer market from the core markets.

  • Orders. A vault order on a deployer market follows the same rules as any account: the open must be isolated, and a stale deployer feed makes the market reduce-only. A vault has no key of its own, so its operator sets the margin mode with update_leverage and the owner field.

    Before block 44,478,893 the chain refused such an order with PRECONDITION_FAILED and the message metaliquidity vault cannot open or extend a position on a MIP-3 market. See block 44,478,893.

  • Backstop. A vault never absorbs the liquidation of a deployer market. This is active. See Liquidation on a deployed market.

  • One vault, one risk. The protocol runs a separate Metaliquidity vault for deployer markets. The core vault lists no deployer market, so a core depositor carries no deployer-oracle risk. A depositor in the deployer-market vault carries that risk. The reason below says what the risk is.

Reason. A deployer market gets its price from its own deployer, and its deployer sets its open-interest cap. The protocol controls neither. A deployer can move its oracle by up to 10% per update. The vault that quotes such a market holds only deposits made for that purpose.

Liquidity providers​

  • Deposit USDC without permission. You receive vault shares priced at the current NAV (cash + mark-to-market of the vault's open positions).
  • Withdraw by redeeming shares for their part of the NAV. A 7-day withdrawal lock applies from your most recent deposit.
  • Your shares gain or lose value with the strategy's realised and unrealised PnL. There is market risk. The vault does not guarantee a yield.

Provider whitelist​

The recognised Metaliquidity provider addresses are a list. Genesis seeds the list, and governance can change it. Only a whitelisted address can operate a Metaliquidity vault and trade its pooled capital. Deposits stay open to anyone.

Status and history​

Metaliquidity supplies the native order-book liquidity that a protocol-owned provider is meant to bootstrap. On established on-chain venues, the equivalent protocol-owned vault was first deferred until after launch (to V2), in favour of external market makers. MetaFlux moved it earlier, because native resting liquidity is needed sooner than that plan assumed. The on-chain vault is landing now. The off-chain strategy and the provider whitelist seed arrive with it.