> For the complete documentation index, see [llms.txt](https://baseperp.gitbook.io/baseperp-whitepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://baseperp.gitbook.io/baseperp-whitepaper/technical-architecture/liquidity-architecture.md). # 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.