# Liquidity Architecture
Maker liquidity in BasePerp is concentrated in a single ERC-4626 stablecoin vault. This keeps depth in one place, clarifies accounting, and makes integrations straightforward.
### 5.1 Stablecoin Vault (ERC-4626)
The vault is the canonical on-chain counterparty for all perpetual markets. LPs deposit a stablecoin and receive share tokens whose price tracks net asset value (NAV) after trading PnL, fees, and any hedging costs. Per-market ledgers roll up into one vault, enabling granular analytics without fragmenting liquidity. Deposits/withdrawals are permissionless; safety circuit breakers exist for exceptional conditions.
**What LPs see in practice**
* Share price (NAV per share) and fee accruals surfaced on dashboards.
* Per-market exposure and historical returns consolidated at the vault level.
* Clear lifecycle: deposit → accrue fees/PnL → withdraw at current NAV.
### 5.2 Cash Flows & Distribution
Revenue sources are limited and disclosed so LP economics remain predictable. Primary inflows are win-based fees (via profitFeeRate on profitable closes), with optional hybrid fixed fees on select markets, liquidation fees, and temporary withdrawal-tier fees during stress. In bootstrap mode, a high LP share (up to 100% of trading revenue) may apply; the protocol share phases in only after stability milestones and always via timelock. Keeper fees pass through; any net surplus/deficit is reported.
### 5.3 Buffer Ratio & Dynamic Withdrawals
The vault tracks a live buffer ratio—a resilience meter against trader PnL shocks. When the buffer is healthy, withdrawals are free and uncapped. If the buffer dips:
1. **Tier activation**. Temporary withdrawal tiers engage (e.g., small fee steps and/or size caps).
2. **Stability first**. Tiers slow outflows to protect remaining LPs and the counterparty function.
3. **Auto-revert**. As the buffer normalizes, tiers wind down to zero without manual intervention.
Thresholds, tier schedules, and state changes are public.
### 5.4 Hedging & Delta Neutrality
Hedging is policy-driven and used only when its expected benefit exceeds cost. Policies define allowed venues, max notionals, slippage/latency limits, and reporting cadence. Each epoch discloses basis error, hedge cost, and residual delta. A pause switch can temporarily disable hedging when external conditions degrade.
### 5.5 Composability & Integrations
Because the vault follows ERC-4626, it can plug into yield splitters, structured products, and collateral frameworks with minimal glue code. Read-only “risk hooks” expose buffer state, OI, and projected liquidity so integrators can make allocation decisions without bespoke adapters.
### 5.6 LP Risks & Disclosures
LP capital faces market and operational risks that are addressed with explicit guardrails and transparent reporting.
* **Market drawdowns**. Short-term NAV dips from trader PnL are possible; buffer tiers and optional hedging aim to limit magnitude.
* **Parameter drift**. Settings such as profitFeeRate, counterSkewCap, liquidatorBounty, and deviationGuard (as well as withdrawal tiers) can change via timelock; notices are public.
* **Extreme events**. Oracle failures or jump moves may produce shortfalls; the backstop is bounded by a securitySlashCap and is not a guarantee of performance.
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