Vector treasury hits $15M: the liquidity engine of LRTfi
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Argues Vector turns idle LRT capital into protocol-owned liquidity by selling discounted VEC bonds and deploying proceeds at higher yield, for example a Pendle position locking about 43% fixed APY, with bribes possibly creating Vector Wars.
Key claims
VEC treasury reached $15M
About $750k put into pt-ezETH on Pendle for roughly 43% fixed APY
Growth requires yield above the bond discount
Vector is turning into the liquidity engine powering the @eigencloud-based LRTfi economy under the hood. 🚀
I have recently outlined my thesis on @vectorreserve. It is huge and it's already playing out. 👀
Let me put this into context! 👇
The @vectorreserve treasury has reached $15M in assets. This is the protocol-owned liquidity (POL) that Vector governance will direct through the broader LRTfi ecosystem in the future.
💰 How does Vector build the treasury?
@vectorreserve sells bonds (vested VEC) at a discount against assets that the protocol can use to generate yield.
💸 How can Vector sell VEC at a discount?
@vectorreserve puts the POL to work across LRTfi protocols, seeking to generate a yield on the liquidity that is higher than the discount at which the liquidity was acquired.
As long as this is the case, @vectorreserve generates revenue that sustainably grows the treasury and that can be used as a source of potential future real yield for VEC holders.
What is unique to @vectorreserve, is that the protocol has its own Liquidity Position Derivative (LPD), vETH that is backed by the underlying treasury of LP positions. It is also a buy-and-hold asset that can be used in any market condition that drives value to VEC. Users can mint vETH against LRT tokens, further growing the Vector treasury and enabling users to capitalize on the exciting yield opportunities Vector offers.
🧑🌾 How does Vector generate yield?
@vectorreserve is deplyoing the POL across LRTfi protocols that offer attractive yields. One example is the @pendle_fi strategy outlined in the thread below.
🐂 What is the bull thesis here?
By deploying millions (soon billions maybe kek) in otherwise potentially idle LRT capital across the ecosystem, @vectorreserve significantly boosts the liquid restaking economy that it sits at the centre of.
As we enter the bull market, high yields generated across a vibrant LRTfi ecosystem, coupled with Vector's unique transaction tax, and stabilized by vETH, will allow for attractive discounts and sustained treasury growth.
As the share of LRT liquidity governed by the @vectorreserve protocol grows, so will the role of its governance in the broader ecosystem. Liquidity is key to any protocol and through the bribing system, LRTfi projects will compete for Vector's POL. Maybe we will even see Vector Wars where protocols try to amass veVEC voting power to skew liquidity allocation in their favour. Who knows.
This would super-charge the protocol's revenue and not only drive VEC demand but also contribute significantly to growth of the yield-generating base (treasury) but also allow for sustainable bonding conditions.
It's a degen play anon, but restaking season is already here and if the @vectorreserve flywheel starts running and it turns into a blackhole of LRTfi liquidity, this could be huge.
But might be nothing. Probably nothing. Right? 👀
@eigencloud @vectorreserve If you want to learn more about @vectorreserve, check my deep dive below! 👇
x.com/zerokn0wledge_/status/1759956381036392880
QUOTING @KernelProtocol
We announced yesterday that the VEC treasury has hit $15m of assets 💰 Now, let’s take a look at one of our recent treasury strategies, where we invested ~$750k in pt-ezETH tokens on @pendle_fi to lock in a fixed APY of ∼43% 📈 🧵
We announced yesterday that the VEC treasury has hit $15m of assets 💰 Now, let’s take a look at one of our recent treasury strategies, where we invested ~$750k in pt-ezETH tokens on @pendle_fi to lock in a fixed APY of ∼43% 📈 🧵