Vaults
Toro DEX features a Two-Tranche Vault System that provides liquidity for the exchange while offering risk-adjusted yields to depositors.
How Vaults Work
Vaults supply the liquidity that traders trade against. In return, vault depositors earn:
- Trading fees
- Funding payments
- Liquidation proceeds
Two-Tranche System
Toro's innovative two-tranche system allows depositors to choose their risk/reward profile:
Senior Tranche
The Senior Tranche is designed for conservative depositors seeking stable yields.
| Feature | Description |
|---|---|
| Risk Level | Lower |
| Yield | More stable, lower upside |
| Priority | First claim on profits |
| Protection | Junior tranche absorbs losses first |
Best for: Users seeking stable yields with reduced exposure to trading losses.
Junior Tranche
The Junior Tranche is for depositors seeking higher yields in exchange for taking on more risk.
| Feature | Description |
|---|---|
| Risk Level | Higher |
| Yield | Higher potential returns |
| Priority | Receives remaining profits after Senior |
| Risk | Absorbs losses before Senior tranche |
Best for: Users comfortable with higher risk in exchange for potentially higher returns.
Yield Sources
Vault depositors earn from multiple sources:
Trading Fees
A portion of all trading fees flows to vault depositors.
Funding Payments
When the market is imbalanced, the vault earns funding from the dominant side.
Liquidation Proceeds
Profits from liquidating underwater positions are distributed to the vault.
Depositing to Vaults
- Navigate to the Vaults section
- Choose your tranche (Senior or Junior)
- Enter deposit amount
- Review terms and APY estimate
- Confirm the transaction
Vault deposits are subject to a cooldown period before withdrawal. Check current terms before depositing.
Withdrawing from Vaults
- Navigate to Vaults → My Positions
- Click Withdraw
- Enter withdrawal amount
- Wait for cooldown period (if applicable)
- Claim your funds
Risk Considerations
While vaults offer attractive yields, consider:
- Market Risk — Vault returns depend on trading activity
- Counterparty Risk — Large losses from traders affect vault value
- Smart Contract Risk — As with any DeFi protocol
- Liquidity Risk — Withdrawal cooldowns may apply
Vault Statistics
Track vault performance:
- Total Value Locked (TVL)
- Historical APY
- Utilization rate
- Fee accrual