💰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.
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