🗄️Nova Trade Vault

Nova Vault is a DeFi protocol that allows users to earn returns on their USDT holdings through an automated algorithmic approach. Users deposit tokens into a pool, which is then leveraged to generate returns through different DeFi protocols (such as lending platforms) under the system.

The vault acts as the counterparty to all platform trades:

• When traders win (have a positive PnL), their winnings are transferred to the vault.

• When traders lose money (have a negative PnL), their losses are transferred to the vault.

In exchange, the vault earns a percentage of trading commissions. These fees are distributed proportionately across shares, motivating investors to remain in the vault.

The vault's collateralization is determined by trader PnL. Stakers receive a positive return as long as their fees exceed their PnL payouts. This has been shown for more than two years, and the procedure includes numerous risk management measures to guarantee that it continues.

When global PnL is negative, the vault begins to build a buffer with those funds, safeguarding staker money and the protocol against future PnL anomalies.

The vault uses an epoch mechanism to capture snapshots of open PnL to better approximate the real collateralization ratio and to reduce risks for the protocol (including stakers). The aggregate PnL of all open deals at the time of the snapshot is represented by Open PnL.

This system ensures that the Nova Vault is always collateralized by absorbing both the profits and losses generated by the platform's traders. This provides a level of security and stability that is critical to the success of the Nova Trade ecosystem.

Anybody with the token can stake it in the vault to provide trading liquidity to the site. In exchange, they earn a share of the fees paid by Nova Trade users.

All deals made on the platform have the vault as their counterparty:

• The vault serves as a central counterparty for all trades made on the platform. This means that traders do not need to find counterparties on their own, as the vault takes on that role.

• When a trader wins a trade and realizes a positive profit and loss (PnL), their winnings are received from the vault. This is because the vault is obligated to pay out any profits that traders earn on the platform.

• Conversely, when a trader loses a trade and realizes a negative PnL, their losses are sent to the vault. This is because the vault is responsible for absorbing any losses that traders incur on the platform.

• By serving as the central counterparty, the vault helps to facilitate trading on the platform and reduce the risk of counterparty default. This can make the platform more attractive to traders who may be wary of trading with unknown counterparties.

• To manage its own risk, the vault may use various risk management techniques, such as setting exposure limits, diversifying its holdings, or hedging its positions. These techniques can help to mitigate the impact of losses and ensure the long-term sustainability of the platform.

• Overall, the vault plays a critical role in the functioning of the platform, enabling traders to engage in trades with reduced counterparty risk, while also managing its own risk to ensure the stability of the platform over time.

The vault is constructed using Nova Trade, which represents a stakers' ownership of the vault (similar to, and compatible with, ERC-20 and known as the Tokenized Vault Standard).