DeFi Protocol Cega Debuts ‘Vault Token Market’ to Facilitate Seamless Investing

On Tuesday, decentralized exotic-derivatives protocol Cega announced a new feature that gives users more flexibility in managing their investments and responding to changing market conditions.

The Vault Token Market (VTM) will boost liquidity, utility and flexibility of users’ investments, Cega said in a press release shared with CoinDesk.

With a total value locked (TVL) of over $10 million, Cega is the world’s third-largest decentralized exotic-derivatives protocol. It allows holders of dollar-pegged stablecoin USDC to earn yields while bypassing the need for active management of positions. Users deposit USDC or other assets like ether (ETH) and wstETH into the vaults, which then employ strategies centered around packaged exotic derivatives such as fixed-coupon notes and put spreads to generate attractive returns. Vault participants receive Cega vault tokens representing their financial position in the strategy.

Each vault runs the strategy for 27 days, beginning every Wednesday at 1:00 UTC, simplifying the investment process. For issuers, however, that means their USDC is locked into the vault for 27 days, keeping them from accessing their funds. The liquidity barrier limits users’ ability to react to changing market conditions and meet financial needs.

The VTM addresses this issue, allowing users an early exit.

“With the VTM, users can exit from their trading positions early, without waiting for 27 days. They can exit 100% of their position, or half, or any amount they choose, providing maximum flexibility,” Cega’s co-founder Winston Zhang said in an interview.

VTM is open to everyone, including market makers and yield farmers, allowing market participants to buy and sell the Cega vault tokens in the open market. VTM’s benchmark price feature ensures fair value for vault tokens and the best execution when selling them or looking to snap up coins at discounted positions.

“VTM opens the door to a wide range of strategic use cases, from liquid staking and restaking to collateralized lending/borrowing. Off-ramping is just the first step in creating robust ecosystem opportunities for Cega vault tokens,” the press release said.

14:21 UTC: Updates third para to say users can deposits USDC and other assets like ETH and wstETH to vaults.