Being able to withdraw assets at any time is a key feature of Valio. In order to ensure that, there are several considerations that need to be met by integrated protocols.
A prerequisite for protocol integration is ensuring that the funds can be withdrawn or made available instantly in case a vault depositor wants to exit. It’s also a prerequisite that a partial withdrawal doesn’t affect the entire position placed by a vault manager.
Instantly available mark-to-market with manipulation resistance
Any instrument that is integrated needs to have a reliable pricing mechanism. This is required to calculate the NAV. The weakest link in these types of calculations are usually the spot price oracles - only chainlink and contract call data will be used as inputs
Bounded gas costs upon withdrawals
When a vault manager deposits funds into a protocol, it’s important that the withdrawal costs of the position are bounded. There exist several systems, in which, over time, the withdrawal costs can grow without bounds
If a position in some protocol is locked and can’t be unwound - the sufficient condition is fractionalisation, such that the depositor can receive a fractional claim to this locked position, where they can then unwind it post withdrawal
Position liquidation considerations
In case positions can’t be fractionalized, the fall back is partial liquidations. Can a partial exit of a position trigger any form of margin events, where the entire position could be liquidated? Can the position be exited partially or wholly? If a position can be exited wholly, alternative exit mechanisms need to be available