In this guide, we will show you how to open a VeleroDAO vault, how to generate USDV, and what you need to do in order not to lose your collateral in a liquidation.
What is VeleroDAO Vault?
The VeleroDAO vault is the core component of our protocol. This is where USDV is generated against the blocked collateral. How widely vaults are used affects the total volume of USDV. Users create USDV by generating it with their collateral and in turn burn USDV when the generated USDV balance is redeemed. The entire process is recorded on the blockchain, which provides full verification of both the USDV in circulation and the collateral that backs it.
Importantly, vaults must be over-collateralized and have a liquidity ratio that vault owners must meet to avoid liquidating their positions. In addition, the debt ceiling is set globally for the VeleroDAO protocol, as well as individually for each vault type.
How do vaults work?
Any user wishing to create USDV can deposit a collateral in the Vault. Then you need to pay the stability fee on the generated USDV balance.
Vault users are free to generate or return USDV and can add or remove collateral with no time limits. As long as vault owners maintain the minimum margin specified for each Vault type as the Liquidation Ratio, they are free to interact with their Vaults.
If the Vault’s liquidity ratio is violated, the position is liquidated. If the user wishes to return the full amount of their deposit, they will need to return the full amount of generated USDV along with a stability fee.
How does it work in practice? How to open a new vault on VeleroDAO?
Go to velero.finance and click the Get Velero button.
Click on Connect a Wallet.
Choose connecting to MetaMask.
Confirm the connection.
Now you can see your wallet on velero.finance page.
Now sign the transaction in your MetaMask.
Choose a collateral type: click Open Vault on Velas.
Configure your Vault. Enter the VLX amount you want to deposit as collateral. Please, note there must be more than 150% and minimally 100 USDV you can generate. We advise you to enter an amount that will give you more than 175% collateral in order to avoid liquidation.
Now create a smart proxy. This is needed for the platform to perform multiple actions in one transaction for your Vault.
Confirm the transaction in your MetaMask, then press Continue.
Confirm Vault creation. Go to the Vault #…
Congrats! You`ve just created your first vault on Velero! Now let’s start generating USDV. Enter an amount of USDV you want to generate. Remember there must be not less than 100 USDV.
Please note that in our example, we have placed a little insufficient funds in a vault, and our collateral ratio is 163%, while we recommend making a deposit with a coefficient of 175%. In this case, you are guaranteed to avoid liquidation.
Confirm the transaction in your MetaMask, and… all done! Here’s how it looks:
Now how to make your USDV visible in MetaMask? You need to add a USDV smart contract address.
Contract address — 0xcD7509b76281223f5B7d3aD5d47F8D7Aa5C2B9bf
Open your Metamask and enter the address in the Import Tokens area.
Now you can see your USDV in your MetaMask.
How to close a vault on VeleroDAO?
Go to velero.finance and press Your Vaults button. Then click Back to Editing.
Set USDV allowance.
Choose Unlimited Allowance.
Confirm the transaction in your MetaMask. Okay, here we come.
Here you need to choose an amount of VLX you`re withdrawing.
And now check your VLX in your MetaMask. They ought to be there.
That’s all, you`re great!
Subscribe to us on Twitter, join our official group, and chat on Telegram to keep updated with the latest news. The documentation and VeleroDAO codebase are publicly available on Github. Also, visit our website and subscribe to our YouTube channel. Velero smart contract address: 0xcD7509b76281223f5B7d3aD5d47F8D7Aa5C2B9bf