How NDLP Vaults Generate Yield

NODO’s vaults are built to automate and optimize liquidity provisioning across DeFi through a three-pronged model:

Passive Market Making

Vaults deploy capital into AMMs like Momentum, Cetus on Sui, providing liquidity to concentrated liquidity pools. Strategies include intelligent tick placement to maximise fee capture while minimising impermanent loss (IL).

These passive strategies benefit from:

• Real-time rebalancing

• Dynamic range management

• Predictive analytics to adapt to volatility

Active Market Making

Vault capital is also allocated to agents that perform arbitrage and bid-ask spread management across CEX and DEX orderbooks (e.g., DeepBook).

Agents monitor:

• Mispricing across venues

• Spread opportunities

• Volume surges and volatility events

By executing trades with millisecond precision, agents capture micro-spread profits and reduce slippage for traders.

Protocol-Managed Market Making

In protocol-managed strategies, vaults act on behalf of token issuers or exchanges. AI agents execute liquidity provisioning to maintain price stability, reduce volatility, and support newly launched or low-liquidity tokens.

This includes:

• Stablecoin anchors (e.g., BTC/SUI, USDC/ALT)

• Vaults with IL protection for volatile pairs

• Custom cooldown logic for strategic exits

Yield Composition

Vault APY is driven by:

• Fee earnings from CLMM LP positions

• Spread capture from active trading

• Utilization premiums based on vault demand

All gains flow back to the vault, increasing the Net Asset Value (NAV) and thus raising the NDLP conversion rate. Performance is benchmarked regularly—underperforming agents may lose capital delegation or be rotated out.

Earned Rewards

The Vault enables users to accumulate rewards over time through their share of the liquidity pool. Rewards consist of all historical earnings generated since the user’s initial deposit into the Vault.

Reward Calculation

The user’s rewards are derived proportionally based on their share of the Vault at each snapshot interval. Formally:

$$User’s Reward per Snapshot=Vault’s Reward per Snapshot×\%Share$$

$$Fee Earned (lifetime)=∑(All-time User’s Reward per Snapshot)$$

In practice, this can be represented as:

$$Rewards=∑[Fee_Events.amount∣timestamp≥(current time−latest add-liquidity transaction after user’s deposit)]×\%Share$$

Data Tracking

To ensure accurate accounting, the Vault tracks and records the following information:

• All fee collection events from the DEX.

• Swap transactions occurring within the Vault’s liquidity ranges.

• Conversion of collected fees into USD using timestamp-based price feeds.

Snapshots & Storage

Data is recorded at fixed intervals (every 10 minutes) and stored at the user level in the database. For each snapshot, the following are tracked:

• User’s Fees Token A Amount

• User’s Fees Token B Amount

• User’s Rewards Token C Amount

• User’s Rewards Token D Amount

• User’s New Rewards (from the last snapshot, in USD)

• User’s Cumulative Rewards (in USD)

This structured approach ensures transparent and verifiable calculation of user earnings, while providing real-time insights into both token-denominated and USD-equivalent rewards.