# Loss Buffer Vault ### Overview The **Loss Buffer Vault** (also referred to as the loss protection vault in the protocol) is a **protection layer for LPs** that smooths PnL volatility. It collects a share of **trader losses** (when the pool wins) and uses that buffer to **cover trader profits** (when the pool loses), so LP payouts are less jagged. ### Why it exists * **Lower LP volatility** — Part of trading losses is set aside instead of going straight to LP liquidity; when traders win, the vault can cover some of that payout. * **More stable yields** — LPs see a more smoothed stream of gains and losses instead of large swings on big trader wins/losses. * **Configurable** — Each vault (per collateral type) has its own parameters and can be enabled/disabled by governance. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.zofinance.io/liquidity-providers/loss-buffer-vault.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.