lov-Strategy Vault Deposit and Withdrawal Limits

Users should note that lov-Strategy vaults are subject to deposit and withdrawal limits based on the current Asset to Liability (A/L) ratio for that vault. The A/L ratio is simply the inverse of the Loan-to-Value ratio (LTV). These protective thresholds protect the integrity of the vaults and mitigate the risk of bad debt. In short, if a new lov-Strategy vault deposit or withdrawal would push the Asset / Liability ratio (or LTV) above the upper vault threshold or below the lower vault threshold, the transaction will revert.

The A/L ceiling (USER_AL_CEILING) prevents new deposits from reducing the leverage applied in the vault too much until a RebalanceDown can be executed. For the lov-USDe-a and the lov-sUSDe-a vaults, USER_AL_CEILING are both set to 70% LTV (Fig 12 and 14) whereas for the lov-wstETH vault, it is set to 86% LTV (Fig 17).

Similarly the A/L floor (USER_AL_FLOOR) prevents withdrawals that increase vault leverage too much until vault health ratio permits, or a RebalanceUp can be executed. For lov-USDe-a and lov-sUSDe-a vaults, the USER_AL_FLOOR is set to 83.5% and 84.5% LTV respectively (Fig 12 and 14) whereas for the lov-stETH vault, it is set to 89.9% LTV (Fig 17).

Once the vault automation adjusts the vault holdings back to the Targeted Effective Exposure range, or if user flows move the vault A/L ratio back to the nominal range, new deposits and withdrawals can then resume.

When USER_AL_CEILING is reached:

  • No new deposits until a RebalanceDown is triggered

  • RebalanceDown may allow new deposits to occur after the A/L ratio is reduced

  • Any new Deposits that would move the A/L ratio above the ceiling will revert

When USER_AL_FLOOR is reached:

  • No new withdrawals until a RebalanceUp is triggered

  • RebalanceUp may allow new withdrawals to occur after the A/L ratio is raised

  • Any new Withdrawals that would move the A/L ratio below the floor will revert

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