M-Vault is an automated option selling vault that focuses on mainstream on-chain assets with decent liquidity, which earn yields through selling options to professional market makers.
Working Mechanism
The life cycle of an M-Vault is divided into several epochs. The duration of each epoch is determined by the vault issuer. For each epoch, there is pre-invest phase, yielding phase and open phase.
- Pre-invest phase: from epoch start till new round initiates
- Yielding phase: from round initiation till vault expires
- Open phase: from vault settlement till new epoch starts
  1. 1.
    Only addresses on the whitelist are eligible to launch M-Vault. Market Makers must have their wallet addresses verified by the Shield Team before launching vaults.
  2. 2.
    Each vault has an isolated margin account. Deposit funds into the margin account of the vault, the amount of which is determined by the size and the type of token of the vault.
  3. 3.
    Initiate vault by setting parameters including asset type, option strategy, strike price, expiry date and source of price oracle, Chainlink or DEX. Launch the M-vault smart contract from factory contract.
  4. 4.
    Users have the right to initiate claims against controversial vault quotes. If the claim is validated, that vault will be reset to the epoch-starting condition. For now, the Shield team will be responsible for scrutinizing the claims and making decisions. Soon, with an updated governance model, these decisions will be collectively made by Shield DAO.
  5. 5.
    Any third party can trigger the vault expiry, after which the vault will be settled automatically.
  6. 6.
    MMs have 48h to offer new quotes after previous round settles. If not, the vault smart contracts will be terminated.
  7. 7.
    All non-withdrawn funds will be automatically re-invested into next epoch of the vault with new quote offer.
Users can invest the vaults anytime, but the yields only start to accumulate until the next yielding phases.
Users can request to withdraw funds anytime, but funds are not available until that round of settlement. All funds are instantly withdrawable during open phases. Requested withdrawals will not be re-invested into next epoch of yielding.
Shield supports two types of price feeds. Shield uses Chainlink as price oracle for settling options if the assets are supported by Chainlink. If not, Shield calculates the settlement price using a weighted average of 15 DEX prices collected every 2 minutes half hour before expiry.