📈Pencils Protocol Vaults
Function Introduction
The Pencils Protocol Vaults 1.0 will first integrate with Scroll’s leading DEX, and the Vaults Pool will connect to the DEX liquidity pool. Users can participate by selecting their preferred LP tokens in the Pencils Protocol Vaults Pool, and flexibly set different leverage multiples. The Vaults contract will automatically allocate the required leverage funds from the Staking deposit pool, satisfying users’ pursuit of higher returns and providing a convenient and efficient fund appreciation experience.
Early active participants in Vaults will not only receive the base rewards from deposit staking and LP staking, but can also earn additional high multiples of Pencils Protocol, Pencil, DEX, and Scroll token rewards.
Vault 2.0 will add collaboration with the leading Liquid Restaking protocol, allowing participating users to enjoy both the native restaking yield and multiple token rewards (including EigenLayer, LRT, Pencils Protocol, DEX, and Scroll). This upgraded comprehensive rewards matrix aims to attract more users and assets.
In the future, Vaults will continuously integrate more high-quality asset offerings, striving to become users’ preferred fund yield management tool by providing diversified, efficient, and secure asset appreciation channels. These will include on-chain delta-neutral strategies, on-chain synthetic yield, and on-chain exotic options.
Leveraged Mining Process
Users can borrow funds through Vaults to increase yields. Taking a user mining the ETH-USDC LP as an example:
The user holds a small amount of USDC and chooses to borrow more USDC.
Vaults allocate the assets to 50% ETH and 50% USDC.
The assets are deposited into the DEX liquidity pool, and the received LP tokens are staked to earn rewards.
For subsequently integrated assets like LRT, similar steps are followed.
The interest on borrowed funds will be automatically deposited and paid into the Staking deposit pool to pay depositor rewards. By evaluating the principal and limiting leverage multiples, Vaults ensures depositors’ funds are safe without liquidation risk.
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