Understanding the Vault Economics

The Blueberry Vaults provide an innovative DeFi solution designed to optimize rewards for USDC holders and liquidity providers of GMX who hold GLP. Below is a description of the underlying economics of the three vaults: the GLP Non-Leveraged Vault, GLP 3x Leveraged Vault, and the USDC Vault.

GLP Non-Leveraged Vault

The GLP Non-Leveraged Vault is an automated reward farming strategy that reinvests your earned ETH rewards back into more GLP. It does this at a dynamic and optimized time interval. Importantly, the vault pays for the gas fees incurred during this process, leaving your rewards untouched.

Economic Implication: This vault employs an automated compounding strategy. By continually reinvesting your earned fees, it capitalizes on the power of compound interest, which can significantly increase your overall rewards over time.

GLP 3x Leveraged Vault

The GLP 3x Leveraged Vault provides leveraged exposure to GLP and its associated rewards. It accomplishes this by borrowing USDC from the USDC Vault and reinvesting that USDC back into more GLP. The vault aims to maintain a 3x leverage, but this may fluctuate.

Economic Implication: The GLP 3x Leveraged Vault introduces the concept of financial leverage, which can amplify rewards, but also increase risk. If the price of GLP rises, the gains are multiplied. Conversely, if the price of GLP falls, the losses are multiplied. Because more GLP is held, the earned rewards are also multiplied.

USDC Vault

The USDC Vault offers a delta-neutral strategy with fee generation through two different sources. Firstly, it earns a variable APR paid by the GLP 3x Leveraged Vault. Secondly, it also earns a minor percentage of all rewards generated by GLP in the associated strategy from the GLP 3x Leveraged Vault.

Economic Implication: This vault provides fee generation on USDC, offering users an opportunity to earn rewards on their stablecoins. While the rewards may not be as high as those offered by riskier assets, they are more predictable and less exposed to price fluctuations.