SOL Vault
Status: Coming Soon (Phase 2)
The SOL Vault accepts SOL deposits and generates yield through validator staking and LST loop strategies.
Overview
Deposit Asset
SOL
Target APY
10–20%
Base Layer
Validator Staking (6–7%)
Alpha Layer
LST Loop (10–20%)
Rebalancing
Monthly (frequent switching is cost-prohibitive)
Decision Metric
LST yield – SOL borrow rate spread
How It Works
Base Layer: Dawn Validator Staking
SOL is delegated to Dawn Labs' own validator.
Always-on — Earns network staking rewards consistently
Expected APY: 6–7%
Cost: Zero (validator commission is internal revenue)
Risk: Validator downtime, future slashing
Alpha Layer: LST Loop
When the spread between LST yield and SOL borrow rate is sufficiently wide, the vault deploys an LST loop strategy:
Stake SOL → Receive dawnSOL (or use Jupiter Native Stake)
Use dawnSOL as collateral to borrow SOL
Restake borrowed SOL → More dawnSOL
Repeat (leveraged staking yield)
Conditional — Only activated when spread is sufficient; long-term hold (weeks to months)
Expected APY: 10–20% (with loop leverage)
Cost: Swap fees, borrow interest
Risk: Rate reversal, liquidation, LST issuer risk
Allocation Logic
Spread Wide
30–50%
50–70%
LST yield − SOL borrow > 3% for 1 week
Spread Narrow
80–90%
10–20%
Maintain existing; enhanced monitoring
Negative Spread
100%
0% (gradual unwind)
Spread < 0% for 2 weeks
LST Loop positions incur swap costs on open/close, so frequent switching results in fee losses. Monthly decision cycles are standard.
LST Strategy Options
Two paths exist for leveraged SOL yield, each with different risk profiles:
Mechanism
dawnSOL collateral → borrow SOL → loop
Direct staking as collateral via Jupiter
Oracle
Pyth Push Feed (multi-source)
Theoretical price (stake rate)
Max Leverage
~10x (eMode)
Varies
Liquidation Buffer
LTV 87% / Liquidation 88% — tight (1%)
Wider buffer (theoretical pricing)
Best For
Higher yield potential
Lower liquidation risk
Risks
Rate Reversal: SOL borrow rate exceeding LST yield creates negative carry
Liquidation: High LTV positions can be liquidated during LST price volatility
LST Issuer Risk: Dependency on LST protocol security
Validator Risk: Dawn validator downtime affects staking rewards
SOL Vault is currently in development. Details are subject to change. Subscribe for updates →
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