Science Popularization: Understanding Perp Dexs' Treasury Strategy in One Article Many people may not have realized yet that putting funds into Hyperliquid and edgeX vaults has become a routine operation for many funds. Instead of making their own strategies, it is better to allocate a portion and let the vaults run directly. In fact, from my observation, in terms of returns alone, mainstream perpetual contracts and these vaults can almost outperform strategy products on the market. Let's sneak in! ⬇️ This article takes @ edgeX_exchange Vault eLP as an example. In a typical perpetual DEX structure, the vault is often used as a central liquidity pool, but the new generation of vaults such as eLP also undertake the responsibilities of market making and taking over liquidated positions. Therefore, we can first summarize and understand the role of eLP: Provide liquidity Passive market maker ▰ Takeover liquidation Upon closer observation, it can be observed that eLP not only ensures transaction depth, but also takes into account fund efficiency management and risk management. Therefore, it can be directly inferred how these vaults make money: Market making income Transaction fees Liquidation expenses Now the TVL of EdgeX's vault is as high as 240 million US dollars. After running smoothly for 202 days, the total profit and loss is 11.43 million US dollars. The nominal APR in the past month was 60.52%, and the highest single day return in history was 1011, 3.08% this year. In extreme cases, eLP fully proves its strategic nature and is considered very favorable. Previously, the limit of eLP could only be exchanged for trading volume, while edgeX is rhythmically controlling the size of the vault, which has now been relaxed. Before the release, I had $35k in eLP and earned 2.7k, plus a few points, the total return rate was very terrifying. Now that it has been relaxed, the influx of funds has resulted in very few points being earned. / Although eLP is still showing positive returns so far, upon closer inspection, every day it still incurs losses. On the second day of 1011, the vault suffered a loss of -0.52%, and 1019 suffered a loss of -0.27%. The main risks may include: Unilateral market exposure: When the majority of user positions align with a unilateral trend, the counterparty's treasury will face potential losses. Bankruptcy or funding gap attack: The classic case is the attack on HLP, where the attacker establishes high leverage positions and extracts profits, forcing the positions into bankruptcy and transferring the burden of excessive losses to the treasury. How is eLP managed when facing risks? In balancing risk, return, and efficiency, eLP has explored a risk control strategy, which, combined with their documentation, roughly includes the following strategies: Dynamic margin transfer ratio: Based on factors such as user profitability and leverage level, the protocol adjusts the margin withdrawal ratio in real time, so that edgeX can maintain healthier margin requirements and reduce the impact of closing large positions on the market. Dynamic leverage and risk limits: As the nominal position size of the trader increases, the allowed leverage level systematically decreases, and each trading pair has a basic maintenance margin requirement, which is then adjusted according to the risk limit. Special Insurance Fund: In response to extreme events, edgeX allocates 10% of its treasury earnings to a dedicated risk reserve. / ESrategy is the beginning of EdgeX's entry into on chain asset management, while eLP is just the first vault to go live, with more vault products coming out later. After understanding what the vault can do in the system, how to make money, what risks there are, and how to deal with risks, we can choose to participate according to our actual situation. The future treasury model must be multimodal, and all strategies are aimed at maximizing fund efficiency and minimizing risk exposure, which is the key indicator for Dexs differentiation into three, six, nine, and so on. How to integrate fragmented and loose liquidity to achieve great things? EdgeX's exploration this year has shown initial results, and I think it still needs to go through TGE baptism and see its quality. / Author: Anymose | A Soft Core Science Popularization Writer This article is for educational purposes only and does not constitute any investment advice. Always remember DYOR!