Introduction

What are VTFs?

Paradex Vault Traded Funds (VTFs) are a powerful new DeFi primitive, setting a new standard for on-chain asset management. Each VTF operates under a single portfolio margin account that can trade perpetual futures, options, and spot giving operators the full range of instruments available on Paradex within one vault.

A single VTF can also run multiple segregated strategies simultaneously, enabling operators to combine delta-neutral, directional, and volatility strategies without needing separate vaults.

VTFs are fully permissionless, meaning anyone can deposit and earn a share of the profits. Users can choose between DIME VTFs, Verified Operator VTFs, or Community VTFs, or create their own VTF and start trading with complete flexibility.

Who should use VTFs?

• An Investor looking for higher yields or returns? → Become a Depositor
• An Asset Manager looking for a larger capital base? → Become an Operator

Benefits for Investors (Depositors)

1. Access to Professional Multi-Asset Strategies
   Benefit from experienced operators trading perps, options, and spot under portfolio margin, often running multiple segregated strategies within a single VTF for optimized risk-adjusted returns.
2. Potential for Enhanced Returns
   Pooling your assets with others allows participation in more scalable trading strategies not typically accessible to individual investors.
3. Greater Diversification
   Invest across multiple VTFs of different risk profiles and strategy types to achieve diversification benefits.
4. Transparent and Secure Management
   VTF operations are governed by smart contracts on the blockchain, providing full transparency and allowing you to monitor your assets at any time.

Benefits for Asset Managers (Operators)

1. Access to Larger Capital Pools
   Manage significant pooled assets from multiple depositors. Trade perps, options, and spot from a single portfolio-margin account, and run multiple segregated strategies within one VTF to maximize capital efficiency.
2. Configurable Parameters
   Set profit sharing percentages between 0% and 30% to attract investors and reward your expertise. Operators can also configure other parameters like the lockup period and the max TVL.
3. Order Privacy
   The off chain order book ensures your orders are fully protected from front running, ensuring trades are executed without external manipulation.
4. Operational Efficiency
   Streamlined VTF management with efficient withdrawals and automated processes reduces administrative overhead.
5. Paradigm Integration
   Move significant size without slippage or market impact through Paradigm RFQ, enabling institutional-grade block trading directly from your VTF.
6. Reputation Building
   Successfully managing a VTF and delivering consistent returns builds credibility, attracting more depositors and opening doors within the DeFi ecosystem.